Capital One Financial to Sell New Preferred

Capital One Financial (COF) will be selling a new issue of perpetual, non-cumulative preferred stock.

The issue will trade under the permanent ticker symbol of COF-J when it begins to trade on the NYSE.

The issue is likely to be split rated–investment grade by Moodys and a couple notches below investment grade by S&P.

The OTC Grey market ticker has not yet been announced–but it will trade on the OTC prior to NYSE trading.

The company has 5 issues currently outstanding with coupons of 5% to 6.20%. These issues can be seen here.

NOTE–the COF-P 6.00% issue was callable 9/1/2017 and almost certainly will be called. It was trading around $25.60–now at $25.37. The issue is only redeemable on a dividend payment date.

The preliminary prospectus can be read here.

EarlyBird was the early bird on this one.

32 thoughts on “Capital One Financial to Sell New Preferred”

      1. I just dont see the value here and also the rating. One can pluck IPLDP with both agencies rating it IG. Extremely solid ute, Moodys just affirmed profile and stated recent Iowa rate case was credit positive. Its coming off a big capital cycle which helps also.
        Anyways I picked up more at 25.42 today, with exD coming next month its essentially par and current 5.0% yield. I see no path to its not getting called. The past call is just a little backside price protection over Cap One also. In addition to it having higher credit profile and cumulative feature in a regulated industry. Its fairly liquid also even though its going on 7 years old.

        1. “I see no path to its not getting called.” Double negative, Grid. So you think it’s getting called. I looked at all its dead brothers and just couldn’t buy more than a couple hundred shares, knowing Ima hafta deal with those funds again soon. Geez.

          So I bought a whole buncha PPWLM instead. Didn’t even budge the 152 ask. $7 divvy. Into the vault she goes. Just pay me, Warren. While I sleep well.

          JMO

          1. Camroc, that was horrible…My bad….A modest excuse if I can…. I was typing the answer while walking 4 mph on a treadmill at my workout facility. I cant proof read very well bouncing around, ha. But its too boring walking in place without doing something.
            So I meant to say I see no path to it getting called.
            Ol’ Warren loves buying preferreds (last year he extracted an 8% preferred from OXY with additional goodies thrown in), but he dont like paying them to people. He called all the PacifiCorp preferreds when he acquired it. But he couldnt get rid those two though.

            1. Grid, I also got the same impression reading your post – IPLDP was being called. But i see Camroc beat me to it, and thanks for the clarification. The irritating thing is that such errors occur quite frequently with the darn auto complete or word selection apps.

              Many times when someone wants to say ” I did not want….” it becomes ” I did want….” for a TOTALLY opposite statement!! Have encountered this on a great many instances.

              But back to IPLDP, that’s a relief, as I own some shares.

                1. Skg, That is not a positive reflection on you if you can understand what I write, ha! IPLDP doesnt have a wide bid/ask like illiquids, but it does have an annoying dime or so spread. Its shown to trade in the 25.40s the past few days while showing a standing mid 25.50 ask. I can be cheap at times but I left bids at 25.46 and hit for some a couple different days and snagged a few hundred more at 25.42 today. I was only laying 300-400 share bids at a time out there, but they got swallowed after some wait times. So near term it has become one of my bigger holds for now. (I am a ute preferred nut and my stash was getting small in that sector).
                  Inspy, in reference to your word missing comment. I would love to blame it on something. But the only fault is with me not getting the words from my brain to my finger tips. Then toss in an abysmal proofreading effort and thats how I send out the bonehead posts!
                  Just to add a little color here and this involves the YTC factor…I would rather own IPLDP than DUK-A, ETI-, or SR-A at their present prices. IPL-D was issued in 2013 at 5.1% and year or so was renamed to IPLDP. It was moved to NASDAQ with common stock parent ticker for Alliant when they moved there on basis they are more technology based to mirror NASDAQ image. The management must have too much free time on their hands to spend the effort on that earth shattering change, but I digress…
                  Anyhow they arent going to call and send a 4.5% issue to market and Utes arent very call happy anyways. So you get a little bonus bps and some back side call anchoring all while being pretty assured its not going anywhere. And if it does go bye bye, no material loss would be happen at proper entry point.
                  But Alliant the Hold Co has had IPl a long time so the preferred was issued under their auspices.

                  1. Grid-

                    I landed 200 shares at 25.49 to establish a position in IPLDP and have another order for 300 shares at 25.43. We will see if it fills. Thanks for the tip. Steve

                  2. Grid- meant to ask you. What is your reason for being so confident that this security will not be called? IPLDP thanks in advance

                    1. Hey SKG, Because I just bought 400 more at 25.46 right before close, that is why they wont call, lol. I bet that doesnt sound like a good reason huh? 🙂
                      My reasoning usually is spot on, but it involves just common sense, and anything beyond those reasonings are out of my control.
                      But presently I see it as this. First IPL has been a subsidiary of Alliant forever and has been part of the system for decades. This means the parent approved of the issue, so there is no change of control from Hold Co to do anything 2) Its only a $200 millionish issue which is not much for a big ute. Utes also get to bake the cost of preferreds into their rates so no compelling reason to call unless regulators were disallowing which they wouldnt as the cost is “in line”. Utes arent leveraged financially in terms of cash like banks so no compelling savings anyways. 3) Most importantly they really would need to reissue at 4.5% to make it worth their time and we arent there yet. 4) Regulators have pushed Hold Co to 51% equity from 49%. That would just dilute and need to raise more capital to be at 51%….Anyhow its basically pinned to par anyways so the risk is minimal.
                      Im spread out over about 30 issues but this is my biggest holding for at least near term anyways by far…MNR-C is second but I view it more as a flipper.

                    2. Grid- thank you for that explanation. Many things I didnt realize so you really educated me. I guess I would be correct in saying the same rationale would be in place for all of these Louisiana and Alabama utility preferred that we see on Tim’s screens with regards to their unlikeliness to get called?

                    3. SKG, as a general rule you are correct in why those are outstanding. But sometimes these old ones get redeemed for other reasons. Mostly with the Holding Company protecting their control. Some of these old preferreds have some very strong protections. For example Ameren preferreds have a mandatory minimum interest coverage ratio on debt above them. If they ever wanted to increase debt above that provision, they would need to redeem the preferreds to do it. That kind of stuff.
                      Todays preferreds dont have those provisions. Basically a kiss on the cheek for paying you the divi and a one or two board member add on to a group of 12 if they suspend dividend. Ya, that is really gonna scare them into paying. 🙂

                    4. I am looking to add more to my IPLDP position if the price gets to around $25.40. Price action appears to be a little soft recently, could be some institutions reducing or dumping their positions.

                    5. Inspy, hard to tell, ave. 30 day volume is 8500, so it moves up and down from there. 50 day ave price is 25.57 and 200 day is 25.67. Your only a month from exD day. If you dont need it patience is great and just walk away. If it was on your buy target list $25.40 may not get it, as it only made a few $25.42 trades before moving back up yesterday. It didnt make $25.42 today.

  1. Out of the gate, this should trade well considering where COF-I is with a 5% coupon. Maybe worth a trade/flip?

      1. I have. Not purchasing many new issues. Not enough coupon for the risk. We usually get an interest rate scare by now so we can buy some PFds at decent prices. Fed has created unattended consequences. This probably want end well.

      2. Tim; May I ask where are you and EarlyBird are going to get this very “Timely Information”??? I love this site but its really getting next to impossible to find anything that is worthy of buying anymore. For that reason I added to my position in HESM which I feel is a good value but a totally different animal than just a typical Corp. preferred. Plus I already own many shares so don’t want anymore. I still have a very large “Cash Position” especially now that my newly acquired COF+P probably will be called.

          1. Hi Web; HESM is on the N Y Stock exchange. Its Hess Oil’s midstream company. They just increased their dividend distribution to $1.70 so the yield is 7.10% based off of todays closing price of $23.91. Like I have said I have read several very long articles on the company and they have been extremely positive on the company. Plus if they weren’t solid they would not have just increased their dividend. Thank You for the question. Iam still a little bit frustrated about just buying my COF+P today “early” and finding out now it looks like its going to be called. Well that life in the Big City. LOL

        1. >Tim; May I ask where are you and EarlyBird are going to get this very “Timely Information”???

          Some of us work in the industry so we get notifications as the underwriters gear up. Can occasionally be earlier than the public edgar filings which is another source of timely information.

        2. Chuck–I get mine from a RSS feed on SEC Edgar–424B2 feed. Also have a RSS feed for FWP and 497K forms on the SEC site.

          1. Hi Tim; Thank You for your speedy reply. After reading it I’m thinking to myself I better just stick to my knitting and use this site for timely information. When I saw the RSS feed on SEC Edgar-424B2 feed and throw in a FWP and 497K it reminded me of the Shelby GT 500 I have on order when one of the guys at Shelby was explaining in great detail the intricacies of the engine. I said to myself “why did I even ask”. LOL PS I truly hope you are having a great time out in Scottsdale. Chuck P

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