Citizens Financial Group to Sell Fixed Rate Preferred

Rhode Island headquarter banking company Citizens Financial Group (CFG) will be selling a new fixed rate preferred stock. The issue should be rated BB+ by Standard and Poors–a notch below investment grade.

The bank has a fixed to floating rate issue outstanding with a 6.35% coupon which trades strongly and can be seen here.

The issue will be non cumulative and will become eligible for optional redemption in 2025. The issue can only be redeemed on a dividend payment date once early redemption is available.

The preliminary prospectus is here.

mcg was right on top of this filing in reader initiated alerts.

23 thoughts on “Citizens Financial Group to Sell Fixed Rate Preferred”

  1. Sorry, but at my age I’m not buying anything below BBB these days….mind you, I also think twice about buying green bananas…

  2. What is most astonishing is that CFG-D was issued less than a year ago with an interest rate of 6.35%. The new preferred released today is only paying 5%. Huge difference in such a short time. Awful!!!

  3. CFG-C (coupon 6.35%) closed at 27.69 today for a SY of 5.76% and a YTC of 3.77%. The 5.76% figure is deceptive inasmuch as the issue resets to LIBOR + 346 bps in 2024.

    If it reset based on today’s LIBOR it would come in at a 5.59% coupon, to yield 5.08% at today’s closing price. If it doesn’t get called. If it does get called, 3.77% is what you’ll get from this starting point.

    New issue, if it breaks from the gate at 25 will yield (surprise), 5%.

    Do you switch for the higher YTC on the new issue or hang with the 5.76% on the old issue knowing that the coupon would reset lower based on current rates or you may end up with 3.77% YTC?

    Depends.

    PS – since I’ve been browbeating HDO for lack of disclosure I will set an an example here. I bought 500 shares of CFG-C on issue. No trades since. Wish I had bought 2-3-4 times as much.

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