Category: Preferred Stock Call

Apollo owned Aspen Insurance has announced a redemption of their 5.95% fixed to floating rate preferred (AHL-C) effective 1/1/2025 which is the next dividend payment date.

Honestly I have been waiting for this to happen for quite some time now. The issue was originally to float starting a year ago, but the company was able to fix the rate at 9.593% because of the prospectus language relating t0 the LBOR/SOFR issue. Just the same 9.593% is a very high coupon for shares just 1 notch under investment grade.

This issue had traded as high as the $26.80 area in the last 60 days–crazy–a reminder that holding shares much above $25 holds potential danger for those paying sky high prices for shares.

The announcement is here.

As has become the norm J posted this in reader alerts early today (very early). Thank you J!!

Indiana banker Merchants Bancorp (MBIN) has announced a redemption of their 6% fixed to floating rate preferred (MBINO) on 1/2/2025. This was generally expected when the company sold their new 7.625% non cumulative preferred last week.

The redemption announcement is here.

I think we can assume that MOST relatively stable companies with outstanding fixed-to-floating issues will call them when available. This does not include mREIT preferreds, which have let issues with a 10% reset ride. Interestingly both Customers Bancorp (CUBI) and Valley National Bank (VLY) continue to have very high yielding issues out there.

I have a mostly complete list of fixed to floating and floating rate issues here.

Sometimes you get ugly surprises–once in a while you get a capital gain bonus. For holders of the Priority Income Fund 6.25% term preferred (PRIF-G) the surprise came in the form of a redemption notice. The redemption notice is for 12/23/2024 at $25/shares plus accrued dividends from 9/30/2024. This issue became redeemable 3/19/2023 and had a mandatory redemption date of 6/30/2026. Shares were trading around $24.30 yesterday and closed at $25.04 today.

It is somewhat unusual for a term preferred of this relatively modest coupon to be called early in this interest rates environment–but the issue is only 1.28 million shares so the $32 million cost to redeem is minor to a $1 billion CEF.

Priority Income has an active ‘at the money’ common share sale program which can readily generate cash for redemptions such as this one.

The good part for holders is they got a 3% pop on their shares and they have plenty of other PRIF term preferreds to chose from to invest their proceeds.

Today we had 2 issues of preferred stock called for redemption. 1 was a mandatory call the other a fixed-to-floating rate preferred.

RiverNorth Capital and Income Fund (RSF) announced that they would redeem the 5.875% term preferred on 10/31/2024–which is their mandatory redemption date. This is one of the most misguided closed end funds that exists–going through 3 names changes and multiple investing goals over the last 7 years. I owned this term preferred since the date of issue in 2017, but had sold it in the last month or two to generate so cash to invest elsewhere. I anticipated that the fund would be selling a new term preferred to generate funds for this redemption but this far nothing has been announced. AFTER this redemption the fund will have assets of around $67 million (using 6/30/2024 financials).

Also today FTAI Aviation (FTAI) announced they would redeem their 8.25% fixed to floating rate preferred (FTAIP). Shares have just become floating with 3 month SOFR plus a fixed spread of 6.886%–no wonder they wanted to call it. FTAI was able to sell a private debt offering this week at 5.875%. The company has 3 other high coupon fixed to floating or fixed rate reset issues outstanding.