Capital One Financial Prices Preferred

Capital One Financial (COF) has announced pricing for their new preferred stock issue.

The coupon will be 4.625%. The issue is non-cumulative and split investment grade (IG from Moody’s-non IG from S&P).

The issue will have early redemption available 12/1/2025.

The issue will trade immediately on the OTC grey market under ticker COFKL.

The pricing term sheet can be read here.

13 thoughts on “Capital One Financial Prices Preferred”

  1. I stated in a previous post re Cap One’s recent preferred offering that Cap One and Wells Fargo failed the summer 2020 Fed bank stress test. While partly true, I overstated things. Cap One and Wells failed the dividend coverage test related to trailing income and per regulations both reduced their common dividends. They both passed other parts of the Fed Stress test.
    Apologize for the error. My source for this is the video from Cohen and Steers
    in August re preferred dividend sustainability for bank preferreds.

      1. Most employers’ policies forbid employees to talk to the press about work related issues. They have spokespeople for that, investor relations etc.

  2. Bought COF-I during early COVID period for $20. Call date isn’t until 2024. This new series doesn’t look attractive at all.

  3. I have still own a little of COF-J. These preferreds with 4.8% coupon that IPOed end of Jan 2020 has consistently traded in $21-$22 in Jul20 and $23s in August.

    So investors in COF-J have spoken and I would not even look at this new preferreds with even a lower coupon unless it trades in $23-24. Wonder who pays the $25 IPO price for them!

    1. Agreed with mSquare. I got bit with an early buy of COF-J. It went down, and took a long time to (sort-of) recover. Lesson learned, I hope. No chance I’m buying either COF-J or the new one.

  4. They have been actively reducing credit limits on credit cards. Also closing personal lines of credit even on their best customers with sterling credit. I don’t know if the shotgun approach will be in their best interest long term. I sold my COF-J a couple of weeks ago. I was never really happy with the 4.8 certainly not interested at 4.625.

  5. Capital One has a lot of customers with a huge amount of unsecured credit card debt. They have been marketing for years in lower income communities. The failure to pass additional financial relief for the unemployed makes Capital One a preferred issue I would not touch. Unsecured credit card debt is at the bottom of the list when it comes to must pay bills such as rent, mortgage, utilities, and even automobile loans. Capital One will be a name that appears on a huge amount of Chapter 7 bankruptcy petitions. Capital One in my opinion is a perfect candidate to have their debt ratings lowered. Many of their deposits are lured by higher interest rates to a nationwide audience that may flee when their defaults substantially increase- not worth the risk to deposit money with them for one percent to two percent interest at best.

    1. Agree, the rate is not worth the risk. They have a large sub prime or near prime auto portfolio and it will be interesting to see how it performs in this environment. Did you see Tim’s comment on Mainstream Bank? Almost 23% of all loans are in deferral. Think about that, they can only be in deferral for a limited time then what? Are the payments due at once, tacked on the end of the loan, settlements offered, pymts forgiven, refinanced? Way too risky for me.

    2. Totally agree. All banks are not equal, even those with comparable credit ratings.

      CFOF and NTRS would represent polar opposites among banks.

Leave a Reply

Your email address will not be published. Required fields are marked *