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I’ve Got To See Debt (Deficit) Progress

The inability of congress to make any real progress whatsoever on the budget deficit – or even anything that gives one hope that they may move in the right direction is stopping me from buying perpetual (or long dated bonds). I own a limited number of perpetual shares already–mostly ones I have held for a long time and have a level of comfort with holding irrespective of the interest rate risk that thye have in them.

I have noticed that the prices on my list of potential buys that have lots of potential for capital gains – keep getting cheaper–obviously investors have little faith in interest rates moving lower.

I am intrigued with the Affiliated Managers baby bonds–the 5.875% issue (MGR) and the 4.75% baby bonds (MGRB) are both trading with current yields of over 7.2%. I have a little of the MGR issue as I sold the majority of my shares at $24.92 in October, 2024 and now it is trading at $20.29. The MGRB issue is trading at $16.39. These are investment grade.

The Brookfield Infrastructure 5% BIPH issue is trading down at $15.99 for a current yield of 7.75%. This is an investment grade issue also.

If we had even an inkling of progress on the budget deficit front I would love to have a truckload of these issues–but we don’t have that inkling of progress–at least that I see. I will be waiting, but these are wonderful issues for those looking for investment grade income.

Large ‘Dump’ Puts Spire Preferred ‘On Sale’

In the last 3 minutes of trading today numerous big blocks of the Spire 5.9% perpetual preferred (SR-A) were traded dropping the price from $23.85 to $23.40–shares did bounce a bit in the after market to the $23.59 area. This is a current yield in the 6.3% area. There is a chance that if one wants a few shares at a discount Monday morning may be the time. The drop was on a multiple of normal daily volume.

Spire is a natural gas distribution company in Missouri, Alabama and Mississippi. The preferred shares are now rated BBB- (investment grade) by Standard and Poors. These shares would be an excellent safety buy at this yield–so course they have the risk with being a perpetual issues.

We have an overweight position in this issue and will not be adding more.

Holders of Carlyle Credit Income Fund Term Preferred – A Potential Call Coming Up

Closed end fund Carlyle Credit Income Fund (CCIF), an owner of CLOs (primarily the equity tranche has a 8.75% term preferred (CCIA) outstanding which has a maturity of 10/31/2028–BUT an optional 1st call date starting 10/31/2025.

This is a monthly payer at 18 cents month on the last day of the month and at this moment is trading at $25.53.

On 1/31/2025 CCIF was able to sell an issue of 7.50% convertible preferred in a private transaction.

We don’t know what interest rates will do between now and October, but if they fall there is a real chance that the CCIA issue will be redeemed on 10/31/2025—or at a minimum fall back to near $25 simply on the potential for a call. In my opinion if shares rise into the high $25’s one should consider selling.

This is an issue that I bought a number of times in 2024, but exited (at $26.67) on the giant silly spike back January. I will potentially re-enter if shares fall down to the $25.20 area (I have a few token shares in the account yet).

RiverNorth Opportunities Fund Preferred Goes ‘On Sale’

Closed end fund RiverNorth Opportunities Fund 6% preferred (RIV-A) went on sale just a bit ago with a mini-dump of shares. It is now trading at $22.77. This issue is rated by Moodys at A1.

For those looking for a decent yield on a very safe issue it may be worth a look, although the bid-ask spread is wide (22.7-23.49) one may not be able to secure the lowest price. Shares goes ex dividend in 10 days.

Time to Swap Out of This Preferred

If you hold the 10.625% Wesco Reset preferred (WCC-A) you can claim your gains by selling this issue now. This issue has a reset on 6/22/2025 at a rate which would be in the neighborhood 14-15%. The ‘spread’ on this one is 10.325%. Current yield to maturity is under 2%. The company already has announced plans to call this issue.

The SiriusPoint 8% resettable preferred (SPNT-B) has a year before it will likely be called and is trading at $25.23 right now–so if one could grab it a little lower it would be a nice replacement for the Wesco issue. The yield to maturity (depending on where one can by it) is around 7%