This is a page where bonds can be discussed. I am thinking primarily $1,000 issues which are of interest to folks.
Like the other discussion pages posts will stay intact for a number of months.
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12/21/2024
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Just filled in the income ladder with a new issue Agency bond. Reckon the coupon is a bit light for most folks here but the 3 years of call protection works for me. FHLB bond…cusip # 3130B2XW0…due 10/4/2034…paying 4.25%…first call 10/4/2027…pays semi-annual
Right. and it is a price above par, and at 4%.
What I find fascinating is that when rates are 5% or lower, we are fine with following the herd and buy them. When rates go up, we say to ourselves, that well if I can get IG at 6%, I’m going to hold and wait until I get IG at 7% or higher. That time is now gone, and welp, we say, “I’m cool with < 5% again.
There is probably a psychologist here, and would be interesting in why some of these things happen with investors. The herd mentality, why people buy high, sell low, etc. Probably has a lot to do with guesses, watching squawk talk shows, etc. Fear of missing out, fear of losing money, fear of … .
I just spent my last bit of cash on SACC. I just got the call notice this morning that it is gone in 3 months. It is under par and very few investors are buying it.
investors with their fingers on the trigger is a great thing for me. This is what makes a market and why the market is still fun to participate in vs the future which is robo investing. I know for sure my kids dont want to participate at the macro level. Just use a website on your phone and plug in retirement date, or plugin in some diversification like international, or small cap or large cap (that is about as complicated as you get) and click and have auto investments go in.
Mr. C – Here’s one of the biggest lessons I’ve learned over the last many years:
No one likes preferreds when they’re cheap.
Mr Conservative, I love my 5.2% no call CD’s 🙂
Have you looked at TVC/TVE instead? I’m computing YTMs at higher levels than 4.25% at current prices.
Dick, TVE current ask of $22.62 is 4.53% YTM (at least by my calc).
PEMEX CONTINUES ITS DECLINE. Refinery at least up and running. I hold these bonds but watch political sentiment in Mexico closely.
https://www.reuters.com/markets/commodities/mexicos-pemex-posts-drop-oil-production-lopez-obrador-exits-2024-09-27/
The new admin of Mrs. Sheinbaum plans to get Pemex (and the Comisión Federale) integrated under a new Ministry. Her party got the necessary seats to push through the required constitutional amendments. Imho that will help reduce the large yield gap between Pemex and Mexico gov bonds.
https://mexicobusiness.news/oilandgas/news/pemex-cfe-could-transition-public-enterprises-under-sheinbaum
Just in an upgrade from JPM (Paywall):
https://www.bloomberg.com/news/articles/2024-09-27/pemex-bonds-jump-as-jpmorgan-says-buy-ahead-of-possible-upgrade?embedded-checkout=true
“Pemex Bonds Jump as JPMorgan Says Buy Ahead of Possible Upgrade
2050 bonds gain to 79.6 cents, highest since February 2023
JPM likes cheap 2035, 2048 notes which offer 10% yields
Petroleos Mexicanos SA bonds rallied after JPMorgan Chase & Co. said it’s time to load up on the debt ahead of a possible credit-rating upgrade.
…
JPMorgan analyst Alejandra Andrade upgraded the bank’s recommendation to overweight from neutral, citing the possibility of the oil driller being reclassified as a “public company” from its current label as a “state productive company.” The change would result in a tighter relationship with the government and potentially trigger an upgrade from Fitch Ratings, Andrade wrote in a note published Thursday.
…
Mexico would need to pass a constitutional reform with approval of two-thirds of both houses of the legislature to reclassify Pemex and JPMorgan said there is no timeline for such a change.”
Discl.: Long Pemex bonds
2 longer duration new issues with highest investment grade/yield:
JPMorgan Chase & Co. 5.25%
9/20/2044
48130CSK2
A-/A1
1 year call protection
YTW/YTM = 5.25%
The Dow Chemical Co 5.25%
9/15/2054
26054MGF2
BBB/Baa1
6 month call protection
YTW/YTM = 5.48/5.48%
Reinvestment risk is the likelihood that an investment’s cash flows will earn less in a new security, creating an opportunity cost. It is the potential that the investor will be unable to reinvest cash flows at a rate comparable to their current rate of return.
Callable bonds are especially vulnerable to reinvestment risk. This is because callable bonds are typically redeemed when interest rates begin to fall. Upon redeeming the bonds, the investor will receive the face value, and the issuer has a new opportunity to borrow at a lower rate. If they are willing to reinvest, the investor will do so receiving a lower rate of interest.
https://www.investopedia.com/terms/r/reinvestmentrisk.asp
A long-term bond generally offers a maturity risk premium in the form of a higher built-in rate of return to compensate for the added risk of interest rate changes over time. The larger duration of longer-term securities means higher interest rate risk for those securities. To compensate investors for taking on more risk, the expected rates of return on longer-term securities are typically higher than rates on shorter-term securities. This is known as the maturity risk premium.
https://www.investopedia.com/terms/i/interestraterisk.asp
TAX FREE. I want to thank posters (especially losingtrader, wr, tex) for sharing knowledge and recs. I reviewed and then have purchased most.
Just saw my estimated tax payment scheduled for debit on Monday. Motivation to continue tax free market.
High Yield Bonds.
I keep a portfolio of these. As soon as I buy I convert to ROTH. Lumen has tripled my investment, MPW almost doubled, NFE a good trade, Arbor a good trade.
I also have to thank WhiteRose for his explanation of the Macaulay calculation. I am close on a large series of bonds that will soon yield profits. I bought these when the sky was falling and hurricanes were predicted.
I have a list of other HY bonds I am ready to purchase when the next market scare occurs.
Took risk which was not easy but kept in mind these are US companies. I work over the world, it is that experience that allows me to trust in USA.
TNT—could you share your list of HY bonds that you find attractive when the next downturn occurs? Thanks.
Ok, I’ll try and not make this a habit, but I’ve “snagged” 100 shares of BORTP (Bank of Botetourt) and I have not a clue what I’ve just bought. All I know is yield on purchase was ~6.5%, seems to not have many shares outstanding, and the common stock is doing good with consistent dividend raises every yr. Schwab says this is non-callable. Where is Grid? He usually eats these things for breakfast!!!
There are some Intel 5.9% bonds available for $96.705 today if those fit into anyone’s portfolio. Cusip 458140CK4, 2062 maturity, BBB+
Bought a Farm Credit agency bond thru Fido. Cusip: 3133ERRS2. 5.37% rate/2034 maturity/1st call 09/2025. I’d be happy to hold it for the ten-year period (safe ballast), but will treat it as a decent paying one-year CD if it is called next September. Of course the early call is the likely outcome. I like this set up much better than those 20 year agencies with very short periods until first call. The house is gonna win those bets.
And…just like that, I received a call notice this morning on a federal home loan bond, 3130AY6S0. 5.4%. 2028 maturity. Bought it 12/2023. Gone next week.
I’m thinking of increasing my MYGA holdings. Can still get an Americo (A rating) at 5.2 for five years. Canvas offers a 5-year one with a 6.35 rate, though it is backed by an insurance company with a B++ rating. Neither of course is FDIC protected, but FL protects up to 300k.
Pickler,
Where are you buying your MYGA’s?
There is a site where you can purchase MYGA’s without the agent’s commission. They are called advisor annuities and DPL will deal directly with you as an individual. A registered investment advisor turned me on to this:
https://www.dplfp.com/products/products-overview/myga-marketplace
Few weeks ago I bought a Mass Mutual Ascend MYGA at 5.6 , but it’s now 4.80.
They are A++.
IF you want an idea of the financial strength of these insurers, I did take a look at what type of assets an A+ insurer carries on it’s books. It was a little shocking because North American (which is Sammons financial) had a portfolio of $50 billion in very low investment grade (think BBB- average ) bonds as the collateral. Sammons’ own bonds are BBB
I also receive the financials of Security Benefit, which is a huge A- insurer.
Their surplus capital notes due in 2031 trade around 7%.
With MYGA’s we are both hoping there’s no pandemic that kills a bunch of people and causes the insurer to have to sell assets.
Losing Trader. I bought a Nationwide SPIA through Blueprint Income, an Athene MYGA through Stan the Annuity Man and a MYGA directly through Canvas Annuities. Canvas has the best rates by far for MYGAs: 6.2 for a 3 yr/6.35 for a 5 yr/6.55 for a 7 yr. The insurance company (Puritan Life) that backs them is only rated B++, therefore the Canvas MYGA is my smallest holding. Florida’s insurance guarantee association backs annuities for FL residents up to $300k per insurer, and I am under that amount for the MYGAs so I hope I am OK with Canvas. (As long as that pandemic doesn’t hit!)
I appreciate the tip on DPL. I am looking to add one more MYGA to replace agency bonds being called.
Pickler,
Just be aware the Florida guarantee is not a state-backed guarantee. It’s a guaranty fund each state has, that may or may not have much in assets.
Getting paid from an insurer failure can take years. Many years.
That’s why annuity sellers are not permitted to include the guaranty fund in any of it’s advertising and it’s not supposed to be used in any way to sell an annuity.
My dad has been in insurance for 63 years. During the financial crisis he said that if the government had let AIG fail, every guaranty fund in every state would have been bankrupted, and likely every insurer bankrupted because the reinsure each other.
I do find it interesting that the debt of some insurers has a lower yield than their non-commisionable MYGA’s.
I , too, hold perhaps 12 % of assets in MYGA’s of varying maturities.
I’ve spoken with Stan the Annuity man and seen rates offered by Blueprint.
I have no idea what Americo is doing to pay that high of a yield.
There’s an Indianapolis -based insurer , Gainbridge,paying 6.15 for 5 years. They only sell online. I do have a problem placing money with an insurer where the CEO has a 42 foot powerboat and expensive second home in Florida , plus is accused of causing the death of someone on his boat by being drunk and crashing.
MYGA’s are the one part of my portfolio I know the least about what’s going on inside the company
For those willing…a new FHLB bond…cusip# 3130B2KY0…5.4% coupon…due 9/11/2034…1st call 9/11/2025…pays semi annual.
For those rurally oriented…a new Fed Farm Credit Bank bond…cusip# 3133ERRS2 with a 5.370% coupon…due9/5/2034…1st call 9/5/2025
I’ve been doing more research on Pitney Bowes so this stems from that:
Who knew in general there are different degrees of the category called “senior unsecured” bonds???????? Pitney Bowes actually as B2 and B3 rated bonds both described as “senior unsecured.” I’ve asked Moody’s why this could be and they’ve been good in responding…. I’ll share more if I get it, but on the surface Moody’s says the B2 senior unsecured is “Guaranteed,” and the B3 is not…. Say what? I suppose guaranteed means guaranteed by PBI, but under what circumstance would that make a senior unsecured more credit worthy than senior unsecured without the guarantee? The guarantee sure is going to be completely worthless in a worse case Ch 11 , wouldn’t it? So what’s the point? I’m trying to see if Moody’s will respond since I asked how frequent is it to have guaranteed and non guaranteed senior unsecured outstanding… I’ve never heard of this before… Has anyone else? The only added protection I can imagine would possibly be in a takeover… maybe….
It is unusual, and I’m curious to hear what Moody’s responds to you with.
Conversely, S&P Global does *not* have separate ratings across the PBI unsecureds. Rates them all the same at B.
Good point…. Just to verify, I searched S&P by CUSIP on Pitney to see if they specifically rate one B2 and one B3 Moodys rated Pitney Bowes senior unsecured the same. Both came up as B….. Yes it will be interesting to see what Moody’s has to say further….
Ahah! Although I’ve not heard from Moodys, I did look up one of PBI’s B2 rated issues to see what I could find… What we’ve assumed (since Moody’s didn’t say in their response) was the guarantee they talk about is from PBI… It’s not….. It’s a guarantee from “certain of Pitney Bowes subsidiaries.” I suppose that could potentially be worth something extra… Let’s see what Moody’s says…
https://www.sec.gov/Archives/edgar/data/78814/000007881421000018/pitneybowes-notesofferingp.htm
Hi Charles. Re bonds….
I have accumulated a portfolio of 18 BB bonds maturing in the next 3-4 years yielding 7-9%.
XFLT is the largest holding (a pref that matures in 26)
ATCOL and SAY are next at 2% of portfolio
Remaining 15 are all @1% or less
This portfolio kind of splits your question on bonds..
My bonds have greater probability of repayment over prefs, enhanced by the early maturities;
but
For the same reasons, the early maturities reduce the upside in a falling rate environment.
However, IMHO
While you can make the case that Fed rate cuts are likely/certain to reduce short term interest rates, I’m not all that sure that the long end will show the same reduction.
Investors buying 10-20 year maturities – including GSE’s with early calls – could be hurt if long rates a) did not fall; or, gasp b) rose
Westie—If a company gets in serious trouble, it really doesn’t matter if the BB’s are slightly higher in the credit stack. Everything will be hammered or maybe not paid at all. I agree with you that long rates might not fall. I doubt that they will rise, but a widening of credit spreads is definitely possible if we get a serious recession.
That’s why all my newer investments are IG, F2F after the first calling date. I’m still stuck with some weak commercial mortgage reits that I hope and pray rise enough for me to take smaller losses and not big ones. If the shit hits the fan in our economy, these type of reits will get slaughtered and might not even make it.
AwwWestie, that is why I said I was looking at what happens over the 6 to 9 months. Also been looking at short maturity in 1k This also applies of course to BB as most are 5 yr maturity.
I am not getting rid of any of my holdings that are FTF as a matter of fact I just bought a preferred that resets in 2yrs I’m willing to take the risk that 3 months SOFR will still be high then.
Hi — Not sure if I’m posting this on the correct page, but I am wondering if anybody has a thought to share regarding the Safeway/Albertsons/Kroger proposal to exchange bonds. I own both Safeway and Albertsons and don’t really understand why I would want to exchange or why it would be smart to participate. See below for example:
Issuer name: SAFEWAY INC 7450 27SP15
CUSIP: 786514AS8
Cutoff Date: 2024-08-27
Please read the event restrictions at the following link: https://www.morganstanley.com/content/dam/msdotcom/en/assets/pdfs/ALBERTSON_SAFEWAY_EOM.pdf
The Issuer is proposing a(n) EXCHANGE AND CONSENT.
OPTION1: SH- USD
QIB Early Exchange for new notes and consent payment
OPTION2: SH- USD
NUS – Early Exchange for new notes and consent payment
I own Albertsons bonds that I bought at a premium, and decided against this pretty quickly when I saw I’d lose money on it. Consent changes I generally assume would not be to my benefit. In general, I only take offers in two cases:
– The bond is too illiquid or getting too risky and I would like to get out of it for various reasons but can’t do so in the regular market,
– The offer has such a clear profit for me that it overcomes my usual hold-to-maturity bias.
Thank you Coaster. I appreciate the “two case” guideline for when to consider an exchange. My Albertson bond is the 8.7% one maturing in 2030. I paid well below par and the exchange offer is at par (if I understand this right), although it trades now quite a bit above. And I still am not seeing what the exchange offers me. I think I’ll just decline. Thanks.
Glad to help, I’ve got the 6/1/26 8.0% with my YTM = 6.86%.
Watching PEMEX, certainly a high risk .
Interesting articles relevant:
https://www.bloomberg.com/news/articles/2024-08-14/pemex-strikes-deal-with-driller-to-redevelop-gulf-oil-fields?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTcyNDY4NTk4NCwiZXhwIjoxNzI1MjkwNzg0LCJhcnRpY2xlSWQiOiJTSFlTT0RUMEFGQjQwMCIsImJjb25uZWN0SWQiOiJESU5NVldFNE81R1BPMDRCSFFGTUtKS0pUMUlMTklIRiJ9.vta6Px6NnDjahZWDOYm68YaqK_ZaZ46xuJgqIm3xeFs
https://www.bloomberg.com/news/articles/2024-08-22/citi-deutsche-issue-financing-to-help-pemex-cover-unpaid-bills?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTcyNDY4NjE0MiwiZXhwIjoxNzI1MjkwOTQyLCJhcnRpY2xlSWQiOiJTSUtUOUxUMEcxS1cwMCIsImJjb25uZWN0SWQiOiJESU5NVldFNE81R1BPMDRCSFFGTUtKS0pUMUlMTklIRiJ9.xa92ky4o5h4Q4ZoE_zQluOm80I0tqSwkXEPEzGiJUvI
Articles gifted so should be able to open links.
PS Bloomberg Terminal stated next week would be high issuance for corporate bonds with buy side market off for the Labor Day holiday. I can never seem to be quick enough to grab these.
yes TNT Pemex is doing more w AMLOs and Claudia Sheinbaum (new MX pres) blessing apparently. Woodside the AUS major, which took over BHPs oil interests including Gult of MX has big project w Pemex there, Trion, 60/40 deal.. https://www.woodside.com/what-we-do/growth-projects/trion
Funny cause MX is hating all over mining, nationalized lithium, but is pushing Pemex now, guess they are worried years of underinvestment, mismanagement and faster internal oil needs will make them an importer! Player no more in the oil market! and ng importer from US. wow. Bea https://www.reuters.com/business/energy/mexico-cut-least-330000-bpd-crude-exports-may-sources-say-2024-04-08/
I forgot Bea, just remembered KMI had a pipeline project to Mexico. Shipping cheap Tx gas to south of the border.
Need a little help from my friends. I have a new idea for an investment. Up until recently I have never gotten into bonds before in my whole life FIDO is saying my investments resemble a short term asset allocation with 1% stocks (growth ) & 8% bonds.
I am thinking of getting more into bonds. The ones I hold now I intend to hold to maturity. I feel like investing in bonds is like holding gold and silver. When you buy you pay more for the investment than you can turn around and sell it for and on top of that you pay a two way commission, so to avoid paying another commission to sell and a loss on principal you need to hold to maturity.
As I discussed with Chuck P it seems like since May everyone else has been interested in bonds and prices have run up.
I will not say which bonds I am looking at but I have found several that the original coupon is from 2-1/2 to 4% and I can buy at discount to par. All are yielding 5.5% to 6% and the maturities range from 2yrs to 10yrs.
If treasuries drop over the next 6 months and if what I read on this site that people are getting lower rates on new CD’s and shorter maturities of 9 months. Then I expect these bonds to get closer to par and I could sell at a profit. If not, I add to my lower income stack of investments and hold to maturity and collect a reasonable safe return.
If people here who are more knowledgeable about bonds like 2WR , Tex could comment on this crazy idea I would appreciate it. I’m not a big player so would be 10 or 15 of each bond. I will say they range from insurance, to energy, banking and a BDC
Charles – As I read what you’re saying you seem to be differentiating between 1k bonds and baby bonds when, considering your concern about paying double commissions since you expect to both buy and/or eventually sell, why not avoid the commissions by staying in the baby bond/stated maturity preferred $25 issues and accomplish the same thing… As I’m sure you know, there’s a pretty broad universe of baby bonds (term used generically) available in your desired maturity range, so why the new fascination in 1k bonds? And as far as acting like bonds, there’s also very little reason from your point of view to differentiate between bonds and stated maturity preferreds because they will not act differently when it comes to the pricing effects of changing interest rates.
Although I tend to look at Fido’s fixed income spreadsheet (is that the right term to use?) daily, overall, I’ve been finding very little reason to buy individual 1k bonds because when I compare yields available vs what available in the baby bond market, I seem to always conclude I’m better off in the baby bond arena unless I purposely want to broaden out from the overabundance of financials, insurance companies and REITs you find there.
2WR, Maybe this is an unreasonable assumption but I’m under the impression that most of the baby bond universe is of lower quality stuff. That’s a perhaps unfair generic statement but is it untrue? I can’t really say with any authority as perhaps its just my own tunnel vision but I also find the $1000 bond universe much more to my liking, but that perhaps has to do with quality of holdings, types of companies issuing etc.
I wouldn’t disagree with you all together pp, but as in any categorization there are exceptions… You guys collectively know a lot of them as in the Illiquids section but I could think of a few others as well but it’s true, there are not many. So I do agree if higher quality is a part of your strategy, then you will find a much wider selection of possibilities in the 1k market… Then again right now, imho, as you look for the quality issues you find it pretty difficult to find stuff with decent yields, especially if you start the Treasuries as your beginning comparison…
2WR, yes for sure, purchases in that arena, given where we have been, seem tough to make right now. Of course can’t speak for Charles, but I’m completely content to mark to market on what I have and collect the interest payments.
Charles, 2WR, PP—buying baby bonds vs. $1000 bonds is really a matter of timing. I bought $1000 F2F bonds over the last 12 months when their yields were higher then BB’s.
For example, NRUC 7.125% at an average price of $101. On 6/15/28 it’s callable and then changes to 5 year T plus 3.53%. It’s rated A3/BBB. Currently trading at $103.8
A few months ago, I bought CoBank 6.45% at $99.8. On 10/1/27 it’s callable and then changes to 5 year T plus 3.487% It’s rated BBB+.
Currently trading at $101.35.
In the last month, I bought Citicorp 7% at $100,87. On 8/15/34 (10 years from now) it’s callable and then changes to 10 year T plus 2.76% It’s rated Ba1/BB+/BBB-. Currently trading at $105.5.
I’m happy just holding until they are called or adjusted. I know that I’ll take a haircut if I decide to sell any of them but I consider all of them long term holds.
You and I bought pretty much the same stuff. I have those you mentioned and also have several other issues in the same vein I bought around the same time such as floating rate BNS, NRUC, ALL etc…
I just wanted to start rotating for an interest rate reduction which I figured would hit last half of this year.
Thanks everyone for the responses. I was busy with honey do’s most of the day and didn’t get a chance to look.
Scott, That was what I was thinking about is the last part of this year going into the first part of next year an interest rate reduction will move all bonds, both BB and 1k bonds.
As for the availability in the universe of bonds I do find it a lot easier to find lists of BB compared to 1k and that is a problem we didn’t use to have especially with the changes in FINRA but it is a minor problem. I also agree with 2WR that the offerings I see on Fidelity are not areas of the market I am interested in. For instance, I wasn’t aware Blue Owl had multiple issues with group investors. Capitol 1, Capitol 2 etc. reminded me of Blackstone and what I had been reading. As we all have been seeing lately the rush to market with a lot of these BB’s have been of questionable quality and I feel the same is true of recent 1k nags that Fido and maybe Schwab are holding in their stables and offering to retail investors are lame plugs they don’t want to hold themselves. ( PP’s comment )
Another reason I was looking at 1k was exactly because in my research and reading some companies I found have not issued preferred or BB’s only 1k. So if you want to invest in them your choice is the common or the 1k
Another point, I think veteran bond traders might agree with is the older bonds are seasoned and have a history of paying. The market is rolling over and these old bonds paying 2.5 to 4.5% interest are coming due over the next several years and investors are showing an interest in them. So does it matter if they are Baa3 rated when they only have 2yrs left yet have a YTM of 5.82%?
Actually you could buy both the common and get 10% and the debt.
Here is a cut and paste:
A business development company specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.
Hi Charles. Re bonds….
I have accumulated a portfolio of 18 BB bonds maturing in the next 3-4 years yielding 7-9%.
XLFT is the largest holding (a pref that matures in 26)
ATCOL and SAY are next at 2% of portfolio
Remaining 15 are all @1% or less
This portfolio kind of splits your question on bonds..
My bonds have greater probability of repayment over prefs, enhanced by the early maturities;
but
For the same reasons, the early maturities reduce the upside in a falling rate environment.
IMHO
While you can make the case that Fed rate cuts are likely/certain to reduce short term interest rates, I’m not all that sure that the long end will show the same reduction.
Investors buying 10-20 year maturities – including GSE’s with early calls – could be hurt if long rates a) did not fall; or, gasp b) rose
scott—I don’t know of any site that provides a list of most agency issues. I sort of search around. Do you have any particular site(s) that you visit?
Here is a place to start.
https://www.fhlb-of.com/ofweb_userWeb/pageBuilder/new-bond-issues-48
Hi Charles – if your question is…
Should I buy some low coupon notes at a good discount to par that have YTM of 5.5-6% knowing that with rates falling these bonds will reprice closer to par?
I am assuming you plan to hold to maturity and not sell them.
My answer would be that there is nothing wrong with this strategy. Of course the discounted lower coupon notes will return par at maturity. The issue is the lower coupon payments/current yield. As long as you are happy to take lower coupon payments for the 5.5-6% YTM nothing wrong with it at all.
Also note that a high coupon note purchased today at par may well get called as rates drop.
Ab I am more of a buy and hold guy these days so bonds fit that category. Although BB and preferred has treated me well as I have bought at par and below . The problem with them is you have to more actively manage them. As Dick, Private and others have pointed out when they get far above par you need to consider selling them Also there are other risks like mergers, take overs, issues going dark, etc.Then you have to search for replacements. This involves more of your time. Kinda like herding kittens.
Our accounts are at all time highs or close and it’s nice to see the capitols gains and the income coming in from having bought at good yields. But now as rates go down I risk some of these being called or if there is a market hiccup I risk losing the capital gains.
Another thought Ab is in regards to your point about accepting lower rates. Right now I have about 25% in Money Market funds and soon I fear I am going to be forced to accept lower rates whether I like it or not. This gives me the opportunity to lock some of this money into these rates for several years and keeps my hands off it. I don’t know what the future holds for the market but hopefully this money will be safe and available then. In the mean time I will continue to be busy herding kittens with the other 75%.
I apologize August, too early in the morning and I am getting my Ab’s and Aw’s mixed up.
hey Charles – different people think of things differently, but I tend to use YTM/YTC as my primary measure of the rate that I am getting on a fixed income instrument. YTM captures both the coupon and any discount.
As a general rule I still like bank loans, mortgages and agencies.
We will see if that changes when rates go down.
As I have expressed on here before, my general view is that we are in a 30+ year period of increasing interest rates. This upcoming rate cut is (in my view at least) a politically driven blip which will wind up causing more inflation and higher rates. At the beginning of the year my expectation was for 100-125 bps in 2024 in rate cuts due to election that has dropped to 75 bps in 2024 due to election.
So I like variable rates and intermediate maturities and want bias in this direction.
When I am shopping for a bond I am looking for YTM/YTC as the primary metric.
For about 50% of my FI portfolio, I keep a 5 year ladder with a rung maturing each quarter. The bulk of my $1,000 notes are in this ladder, but I do have some long term agencies which don’t fit into the ladder.
When I look for a fixed income instrument to fill a rung on my ladder I use the following process:
1)Look at the 5 year Treasury, non callable and callable CD rates. I subtract non callable YTM from callable YTM to get the yield pickup.
2)Search agency issues trading at or below par and check to make sure I am getting enough yield pickup in terms of YTM over comparable treasuries.
3)Check IG corporates (below par) and make sure there is decent yield pickup over agencies and callable CDs. I typically don’t include BBB- credits in this search. I tend to like financials, industrials, energy and reit notes in this area, but also try to keep things diversified.
I pick the highest YTM with best credit quality I can get. Perfectly fine with CDs, Agencies or IG corporates. I have some of each in this ladder.
If it comes up corporate, then I check into the companies finanicals.
My preference is generlaly for agencies as long as the yield pickup is there.
Also perfectly fine bying a low coupon note at a discount as long as I am getting a decent YTM.
I do keep a mixture of MLPs, mREIT prefs, CLO prefs, agency MBS bonds, property REITs and a bank loan mutual fund. This comprises the other 50% of my fixed income book and this is where the bulk of the credit risk is. The intent to this portion of the portfolio is to boost yields. At this time I don’t have any baby bonds, but I have in the past and I will in the future.
Babys have more credit risk (IMO) and I would rather take credit risk via diversified portfolio of bank loans (CLO prefs…) or mREIT prefs.
I don’t use fixed income instruments to speculate at all. So I don’t buy babys or prefs at say $20 with a hope they will quickly go to par. I am looking for income with fixed income instruments. I view all of these as very long term investments and if I sell any of them it is because something went wrong.
FWIW works for me and I thought I would share.
Agree on the selling if something goes sideways. I have never been buying speculating something will go to par for a quick buck. I buy for the income.
I own many $1000 bonds, mostly bought before I knew about preferreds and BBs. Many are vulnerable to being called. They’re senior debt with good ratings, and I like being conservative late in my eight decade.
I always expect to HTM. My bonds are illiquid with wide spreads. Much easier to trade BBs.
When buying long-dated maturities (5-10 years or more), CY is my main criterion. I want cash flow now, not pie in the sky. I rarely pay more than a dime above par.
For more risk, the $25s are great. Liquid. Easy to size and later increase or decrease a position.
My biggest quandary right now is finding replacements for called or maturing bonds.
Fido will let you set your own bid or ask prices, but only on a daily basis. It often doesn’t go thru on the same day, but being persistent I’ve been able to bypass the spread. Their $1/bond commission is manageable when amortized over a number of years. Also, bonds can have selloffs like preferreds, when good deals can be found at the ask price.
New Fortress Energy. I have been adding to their 2025 bonds. Per earnings call NFE has the funds to redeem. Also this is a secured bond with almost $8 BILL in assets (a portion is not). YTM has been 10%. IBKR
8/14/24 Fitch Downgrades New Fortress’ Default Rating, Citing Refinancing Risk
https://finance.yahoo.com/news/fitch-downgrades-fortress-default-rating-142000934.html
R2S. I am aware. As I posted the 25 bonds are to be redeemed. Also as I posted the information is available in the last quarterly call.
CUSIP: 644393AA8 last trades 8/21 around 10.30% to 11.08% YTM, down from the 10% and lower range where it had been trading and the highest yields in the past 3 months at least.
“And on Page 12, we have two main initiatives. First is to refinance our existing 2025 notes, those are due in September of next year.
We’ll look to extend the maturity of those notes as soon as possible. We have an existing commitment to backstop this refinancing. And so we feel like getting those notes refinanced is secure and we’ll be in the market here soon to kind of get the best execution on that refinancing that we can….
“So what we wanted to do here is provide a very simple walk from our adjusted EBITDA reported numbers to what really is kind of our cash flow available for debt service. So the cash we have to pay debt, eventually deleverage and then, of course, also generate free cash flow.
So in the remaining part of 2024, we start with $1 billion of adjusted EBITDA, and we end up with $683 million of cash available for debt service. In 2025, we’re going to decrease SG&A. We’re going to decrease CapEx and we’re going to end up $1.3 billion of adjusted EBITDA, but $933 million of cash flow available for debt service.”
All of the New Fortress bonds seem to be secured based on the S&P website (or at least the 25, 26, and 29 notes). The S&P recovery rating is 3(60%).
Dave. I have owned the 25 bonds since issuance. They came to the market same time as the preferred GMLPF (which in my opinion will not be paid after 2024). Issued 144A but IBKR allows purchase. I have never touched the common but might if they get thru some upcoming issues. I would not touch the 26, or above on todays date. The 25s are good. One cannot expect HY without risk. I only shared because I think it a good opportunity but each should perform their own diligence.
Speaking of risk, I bought more Lumen. My goodness, what a return.
Speaking of IBKR, do you think the reason they sometimes allow 144a purchase and sometimes not…or indeed sometimes allow purchase of fixed to floating , sometimes not, is they don’t have enough employees and maybe rely on an outside service?
I notice they often have 144a stuff not tradeable but then have the same security under an IBKR number and it’s got a slightly different bid/ask.
I think IBKR let’s you buy some of the Reg-S variants from combined Rule 144A/Regulation S offerings.
Hey TNT,
I am seeing your post now. What do you feel that way about GMLPF? I’ve had a hard time tracking down information on them.
Parent company NFE doesn’t look bankrupt but something seems to be wrong with the preferred since the sale to New Fortress. Don’t know what it is this time maybe some clause allowing investors to be screwed? I have a mere 100 shares and haven’t bothered with it much. Too cheap to sell.
follow the comments on this blog for somewhat up to date info.
https://seekingalpha.com/instablog/30534115-joeri-van-der-sman/5598460-special-situation-indiscriminate-selling-in-gmlp-preferred
Wes Edens desired investment grade ratings early this year. NFE missed timeline given to street on project. Puerto Rico and FEMA terminated NFE contract early for convenience. As a result NFE common stock has fallen. Wes has no hope this year or next for investment grade. NFE only paid GMLPF for clean financial statements. My guess is NFE will have no reason to pay in future. Also at some point NFE common owners will ask why NFE is paying preferred dividends out of NFE earnings.
BAM –
https://finance.yahoo.com/news/brookfield-seeks-close-10-billion-074737515.html
Bloomberg) — Brookfield Asset Management is asking banks to line up about €9.5 billion ($10.6 billion) of debt for its potential take-private deal for Spanish pharmaceutical producer Grifols SA, according to people with knowledge of the matter.
The Toronto-based investor has asked banks to put up the funds to refinance Grifols’ existing debt, which includes loans and high-yield bonds, according to the people, who asked not to be named because the talks are private. Participating banks would commit to offer the financing before selling it on to investors.
The funds could be needed as the take-private purchase would trigger a clause that allows bondholders to demand the company pay them back at above par — well above where some of its bonds are currently trading.
Grifols’ 2028 bonds headed for a record gain after the Bloomberg report was published, jumping more than 6 cents to near 94 cents on the euro, while the company’s shares climbed as much as 6.4% in Madrid.
The debt-raising plans follow the firm saying last month that Brookfield and the Grifols family had agreed to consider a bid. Including debt, the deal would likely rank as the biggest takeover of a publicly-traded European company since at least 2022, according to data compiled by Bloomberg.
Grifols, a maker of medicines produced with blood-plasma, has been struggling to recover from an attack by short-seller Gotham City Research in January. That sent Grifols’ shares and bonds into a tailspin, and the volatility was compounded over subsequent months by a trickle of bad news, including concerns over cash flow and accounting adjustments on investments in China. The company sought to calm investors by naming new management and removing the family from executive positions.
If the family and Brookfield go ahead with their plans to take the Barcelona-based firm private, the debt package will likely be €8 billion in drawn debt plus a revolving credit facility of as much as €1.5 billion, the people said. Brookfield and a representative for the family declined to comment. Press officers for Grifols didn’t respond to calls and text messages.
The majority of the financing is likely to be in dollars, one of the people said. One bank has offered to backstop the entire amount, another said.
Banks are keen to underwrite big debt packages after a couple of years of moribund deal activity. Lenders are now more confident they can sell the debt on to investors, given market bets that interest rates have peaked.
Brookfield is limited in the amount of new debt it can put on Grifols. The firm’s leverage levels have been under scrutiny and its credit rating has been downgraded by three agencies since March, with Moody’s Ratings ultimately dropping coverage in July.
Mark Carney, chair of Brookfield Asset Management, is also chair of Bloomberg Inc.
Kroger offers $10.5 billion in bonds to help pay for Albertsons merger
Supermarket chain Kroger Co. on Tuesday said it was offering $10.5 billion in bonds to help pay for its planned $24.6 billion merger deal with rival Albertsons Cos. Inc. – FWP = https://www.sec.gov/Archives/edgar/data/56873/000110465924091338/tm2421523d5_fwp.htm
The announcement — for an amount that could be among the largest for high-grade corporate bond deals this year — was made a day after Kroger
KR
-1.36%
submitted a regulatory filing outlining plans to offer multiple senior notes, due as far out as 2064.
Citigroup Global Markets and Wells Fargo Securities were serving as lead joint book-running managers for the debt offering, Kroger said Tuesday.
Kroger said that some of the notes — due in 2026, 2027, 2029 and 2031 — are subject to “a special mandatory redemption” if the merger deal falls through or the companies unable to complete it by a set date. If the merger doesn’t go through, Kroger said it expects to use the proceeds from the notes due in later years for “general corporate purposes.”
Shares of Kroger were up 0.1% after hours, after falling 1.4% during regular trading. The stock is up 13.9% so far this year.
The Federal Trade Commission has sued to block the tie-up with Albertsons
ACI
-0.81%
, saying it would push grocery prices even higher and limit consumer choice. Kroger has disputed those allegations, and Monday said it had filed a motion in court alleging that the agency’s approach to stopping the deal amounted to government overreach and a violation of the Constitution.
Kroger and Albertsons last month agreed to pause the merger as they awaited a court ruling on a Colorado state lawsuit blocking the deal.
Albertsons’ stock was up 0.6% after hours, after finishing 0.8% lower during regular trading.
Having been involved in trading M&A for many years, it would be a shame if this deal got through. It’s very anticompetitive,
The history of Albertsons previous merger was they found a weak buyer for stores that were problematic from an antitrust perspective, then once the merger was done they engaged in a brutal price war that sent the buyer into bankruptcy in about 6 months.
KR likes to claim their competition is Costco and Sam’s but that’s ridiculous.
Supermarket overlap analysis is very granular, getting down to whether individual stores are anticompetitve.
Just picked up these to fill in the ladder…
new issue FHLB Agency bond cusip# 3130B2BD6 with a coupon of 5.8%…due 8/22/44…continuous call after 8/22/2025…pays semi-annual
Capital Impact Partners bond cusip#1 4020AEU4 with a coupon of 5%…due 8/15/25…no call…pays quarterly…S&P rated A+
New Issues:
(In light of B Riley and other recent events, absolutely sticking to my mantra of avoiding junk or junk in an investment grade wrapper, at all costs. Absolute not worth the few extra bps and aggravation)
JPMorgan Chase & Co. 5.00%
08/16/2034
48130CQL2
2 Year call protection
A-/A1
JPMORGAN CHASE & CO 5.50%
08/16/2044
48130CQM0
2 Year call protection
A-/A1
Chase has been issuing annual payers. Scammy behavior in my book. Caveat emptor.
Much appreciated Theta… Got the 5.5% JPM bond via E-Trade. Fido and Vanguard said “No Market” for these either online or with a desk call tho both offered a similar JPM bond paying 5.2% with 1 year call…hmmm
TVA –
Just noticed TVA will be issuing $1 bil of NON CALLABLE 10yr 1k bonds they intend to list on the NYSE – https://www.sec.gov/Archives/edgar/data/1376986/000137698624000020/a2024seriesapowerbonds-pre.htm.
Using proceeds to pay short term debt
Moody’s just officially rated it AAA yesterday –
2WR, thanks much for letting us know. Any educated guesses on coupon?
Educated? No, but on Fido’s list of agency bonds TVA’s outstanding 10 year maturity bonds are trading in the 4.18-4.25% range…
Looks like they’ve been priced at 4.375%: https://s25.q4cdn.com/191816265/files/doc_news/2024/Aug/08/tva-prices-1-billion-of-new-ten-year-bonds-final-draft.pdf
Thanks, Nathan
Don’t forget about TVE and TVC – they’re cheaper than the new issue –
TVE 2.216% 5/1/29 @ 22.24 = 4.87% YTM
TVC 2.134% 6/1/28 @ 22.80 – 4.81% YTM
2WR I assure you I didn’t overlook TVE&TVA babies, Been adding for several years currently my largest positions combined. trying to finish out my Indiana munis before the rate cuts get in full swing
Jeffries new issue at Schwab
47233WGT0 6.0% 8/16/34, call 8/16/2025 (semiannual)
This agency at Schwab today for 100.10:
3133EREJ6 6.3% 5/14/2049, call 5/14/2025
Issued 5/14/2024
I bought some as a cash stash, kind of like a time-release pill.
Thanks R2S. Bought some, but those sold out fast.
TAX FREE. Would appreciate any advice knowledge on Tobacco Bonds. I do not smoke. I like this for the investment but also knowing the tobacco mfgs. are paying. As higher interest rates have impacted, it seems not only the yield but capital appreciation might be possible?
New to this so would only buy through a fund. Invesco has managed fund.
These didn’t exist when I was in muni’s so not much I can help with.. Since you mentioned Invesco can I assume you;ve seen this on tobacco bonds? https://www.invesco.com/us-rest/contentdetail?contentId=b7a75d0b-59e9-4e11-8293-f8d7fd7bbbd4&dnsName=us
muni cefs are chock full of them. if short term rates go down along with their leverage expenses I think those will do well. I use a mix of ten or so of them and swap where applicable. mmd. mqy, etc
When I looked at these issues, each state’s TOB bonds were structured differently. That’s why some were highly rated and others pretty risky.
I buy a lot of munis and spend my days reading official reports. I also live in NV with no state income tax.
If you have a particular bond I can give you my thoughts.
Just as a thought, I have found the best bond issues –those with the best risk-adjusted return, are unrated munis. They are generally smaller issues.
And based on the old days, there’s a reason for that LT. I don’t know how much bond trading among those who trade for their firms may have changed but way back when, I’d estimate that 90% of all muni traders concentrated 100% on maybe 20% of the bond issuers outstanding… If you saw a bond not within the 20% you wouldn’t bother…. It didn’t matter if it was unrated and yet AAA quality – if it wasn’t a “name” bond, getting a bid was problematical and, therefore created opportunity among the unwashed 80% if either a trader or investor wanted to take the time to find about the name…. Computers and databases I’m sure have tightened up those relationships so there is more relative liquidity, but the smaller, unrated muni I’m sure is still an underserved area…
Totally agree , 2whiteroses. Most of the unrated Nevada stuff is new neighborhood infrastructure debt, that ultimately attaches to each lot and becomes a priority lien. There are a limited number of buyers of unrated debt, and Stifel is typically the bookrunner as well as the main market maker. I never got around to doing this but I really should create a bid price for all of these issues. I don’t think IB permits a bid without market maker bid/offer , and I think their claim is it’s an MSRB rule. I have no idea if its really such a rule
Thank you!! I really appreciate this. I live in TN also a tax free state.
I am just beginning going down the rabbit hole on tobacco bonds. My first move was to look at my state, TN. TN has an incredible financial rating . TN did not monetize its funds. There is a website that explains exactly where the money is spent every year.
Of interest if one has time is: https://www.propublica.org/article/how-wall-street-tobacco-deals-left-states-with-billions-in-toxic-debt
There are more articles. Propublica blames Wall Street, I blame the states.
For those willing… Federal Farm Credit Bank Bond cusip#3133ERNU1
due 8/8/39…coupon of 5.610%…1st call 8/8/25….pays semi-annual…1st settlement date 8/8/24
Two new fixed-to-float Sr. Notes from COF.
https://www.sec.gov/Archives/edgar/data/927628/000119312524183921/d824155dfwp.htm
https://www.sec.gov/Archives/edgar/data/927628/000119312524184824/d824155d424b2.htm#srom824155_4
“We will issue the notes in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. There is no sinking fund for the notes. The notes are a new issue of securities with no established trading market. The notes will not be listed on any securities exchange.”
Another note that is not listed on any exchange. Not sure, why a company does this. Does anybody have insight as to why?
that is just boilerplate where it means you have to buy from the bond desk. I would not read anything into it.
Am I reading these right? Neither one of these starts floating until 1 year prior to maturity? Why bother?
They had to add that to sell them, would be my guess.
Good a guess as any I suppose, J, but what buyer would tell the underwriter that I’m not buying unless you add a float rate for the last year before maturity? It just seems unusual..
Does anyone know if the $1000 Toronto Dominion 7.25% issue is subject to Canadian withholding tax or is it exempt? Thanks.
ticker? CUSIP?
Justin—CUSIP: 89116CKP1
oh boy.
These are the Canadian equivalent of COCO notes.
they pay regular interest, but they are NOT your standard bonds.
https://www.sec.gov/Archives/edgar/data/947263/000119312524167409/d775140dfwp.htm
Citi has a new 1,000 pref in the market, Series DD. I can’t access that but it’s caused the older Series CC pref to be down slightly in price, and offered at my brokerage – IBKR. The new pref is better because of the longer call, but I’ll take what I can get.
Series CC (offered at 100.19 on Interactive Brokers)
172967PK1
7.125% Fixed Rate Reset Noncumulative Preferred Stock, Series CC
resets to the five-year treasury rate plus 2.693% , quarterly in arrears,
beginning on November 15, 2029
https://www.citigroup.com/rcs/citigpa/storage/public/Series-CC-Final-Prospectus-Supplement.pdf
New Pref, Series DD
172967PM7
7.000% FIXED RATE RESET NONCUMULATIVE PREFERRED STOCK, SERIES DD, resets to the ten-year treasury rate as of the most recent reset dividend determination date plus 2.757% quarterly in arrears, beginning on November 15, 2034.
https://www.sec.gov/Archives/edgar/data/831001/000119312524183351/d819670dfwp.htm
All Citi prefs – https://www.citigroup.com/global/investors/fixed-income-investor-relations/capital-securities
The Series DD is trading ~102. Makes me feel better about my purchase of CC at ~100.
https://www.finra.org/finra-data/fixed-income/trade-history?symbol=C5856465&bondType=CA
I actually snagged some of the Citi Series DD today at $101 via Schwab.
I like the 10 year no call and it also resets to the 10 year, so some diversification from a duration perspective.
Good call Maine. I actually see a reason to own both. I have some of the CC, but looking to maybe get into this one too.
I own the CC. Thanks for pointing it out though. I picked up some more today. Not as nice as when I originally bought, but it gave me a place to put some dividends I had sitting in the account.
I need to move some more money over from Fidelity to IBKR.
Yeah, I have Fidelity, Schwab and Interactive brokers. Fidelity has been the worst lately. Min 50k, and most of the time they come back with no offer or a bad one. I need to set up an eTrade account.
Maine- is the C-DD a qualified distribution? As a preferred stock, I would think so. I bought some today (Thursday) at $101.04 Thanks.
Yes, I believe they are qualified. Both are traditional Preferreds.
Ref PRE-J looks like PFFF no longer holds. It’s in the Pink sheets. It fell to 14.51 b4 bids showed up
These junior subordinated bonds were issued somewhat recently by American Electric Power. I was curious if anyone here had an opinion on these. The 6.950% issue looks like it has 10 years call protection and then the rate resets off the 5 year. I think Dominion had similar issues recently. I wonder if these will be a new trend.
FWP
https://www.sec.gov/Archives/edgar/data/4904/000000490424000058/a06-2024aepfwp.htm
Prospectus
https://www.sec.gov/Archives/edgar/data/4904/000000490424000062/a06-2024aep424b2jsds.htm
ETR’s recent issue had a 10-year deferral also. I thought it may be what the holding companies are doing.
Any care to define capital stock? Also, note if they defer my read is that all the subsidiaries must also defer. That to me makes deferral a real last resort. Anybody else have opinions?
During a Series A Optional Deferral Period or a Series B Optional Deferral Period, we will not, and will cause our majority-owned subsidiaries not to, do any of the following (with limited exceptions):
•declare or pay any dividend or distribution on American Electric Power Company, Inc.’s capital stock;
•redeem, purchase, acquire or make a liquidation payment with respect to any of American Electric Power Company, Inc.’s capital stock;
•pay any principal, interest or premium on, or repay, purchase or redeem any of our debt securities that are equal or junior in right of payment with the Debentures; or
•make any payments with respect to any guarantee by us of debt securities if such guarantee is equal or junior in right of payment to the Debentures.
Found on the web. “The capital stock on the balance sheet is a broader term that includes all kinds of stocks issued to raise capital to finance the business operations. It will consist of both common and preferred shares.”
So is this saying that AEP and all its subsidiaries cannot pay dividends on their BB, preferred stock and common stock if they defer? This is how I read this.
I brought an AEP $1,000 issue for several reasons.
1- They have no recent history of offering retail preferreds or baby bonds, as a holding company including their subsidiaries.
2-Investment grade rated by both Moodys and SP.
3-It is a 5-year fixed rate reset which helps mitigate interest rate risks.
4-My strategy is to own 20 different utility HOLDING companies each about 1% of net worth. That is my risk mitigation for the environmental risk and the possibility of interest/dividends being deferred.
So I have a different risk mitigation than most posters on this board. I contemplated the ETR 1,000 bond issue but stayed with my Entergy retail holding. My preference is for RETAIL issues. I will also pass on the new 1,000 Wells Fargo issue.
Everybody is positioning for a rate cut, including myself, having recently purchased WRB-E and RNR-F. My positioning for 2025 and beyond is 10-year rates in the 3%-4% range going BACK up. Washinton DC spending and tax policy as the reason. I don’t see the 10-year yield dropping below 3% for every long (if at all). Our government not properly functioning will not last forever.
Here’s an oddball new senior AA- issue at Schwab
Local Initiatives Support Corporation (non-profit)
53961LBK4 5.2% 7/15/2027, call 7/15/2025
pays quarterly, first settlement 7/25/2024
When I invest in corporate issues, I look for some premium over CDs, TBILLs, or Agency issues. It’s hard to see a good risk reward for corporate bonds at little to no increase over the instruments that have been historically the safest.
I’m sure people will buy it. It has a great credit rating. At the interest rate offered, I’ll stick with them.
For me, it’s really about duration. The agency issues all (or most?) can be called within a year and then at short intervals after that. I will take a corporate bond at the same rate as a CD or other instrument if that rate is locked in longer, as in some bonds that are listed as continously callable can’t be called until several years from now or even a few months before the term. I ‘ll take that IG income guaranteed for X years over a different instrument with a much shorter time frame to a possible call.
I bought some as a gesture. They funded my program for a while. LISC is an interesting organization and invests in my city.