Michigan utility CMS Energy (CMS) has priced their previously announced new preferred stock issue.
The issue which is cumulative and qualified prices at 4.20%
The issue will have an OTC grey market ticker of CMSEV and will begin to trade immediately (or when the various brokers get the issue loaded into their systems).
The pricing term sheet can be found here.
According to Schwab CMSEV has changed its ticker to another symbol. But they couldn’t provide me the new symbol at this time.
The issue at hand is that interest rates might not go up much. As someone else explained an interest rate winter might be upon us. That basically was described that, yes, rates will go up but will only reach a plateau that is lower then what we were used to just several years ago. So a 10 yr treasury note which had peaks of 3% in the recent past might only have peaks of 2.5%. A new lower range might be in play for many years to come.
I guess what I am saying is that that IG preferred paying 4-4.5% might not be pressured as much as people think over the next several years. The punishment in price we think might happen will not in the magnitude we have seen in the past.
Methinks you may be sitting on this one forever. CMS has some uber-ambitious projection regarding their greening outline and will prob dip and tranche-crash many more times in pursuit of their goal.
Joel, they all can be forever as you know. I picked up some NMPWP at about $82 recently and that low yielding IG has been circulating for easily over 70 years. Being funds always need new liquid issues and dont care what they can get their hands on, this $200,000,000 plus issuance will get absorbed into funds somewhere. Yes, the yield is pitiful, but certainly wasnt surprising.
Grid, I hear ya! Eventually, investors are going to experience exactly why preferreds are low tranche bonds. Right now, there is liquidity and interest rate support. Day in, day out, era after era, regardless of policy; price is the face they wear. Buy right.
No preaching or complaining. For me, $420 of inflated paper on a $10,000 loan no longer makes sense, esp when principal liquidity is variable to me. I’ll wait for those prices to change or just spend down some cash. I am not perpetual and WILL at some time be called.
We are no longer investors, we are all speculators.
You have all helped me to clarify my outlooks.
Joel
Thanks for your comments, just a question I have. Would you say a Dividend stock paying 4.5% , would be higher up in the “Tranch” than Preferred’s. I am more interested in the income than capital appreciation.
TY
Hey Gridbird….I just picked up a few shares of NKM-PB which is also Mohawk Power. Do you have any idea what or if there is a difference between NMP and NKM?
With a National Grid div of 7% if that’s correct makes me wonder if I should own the common stock instead of the Preferred.
Hi Richard. There is no difference in standing between it, B and C. And in fact NMPWP was actually NMK-A in a previous life as it is the original issue. My preference is it because of its relative large depth below par.
NMK has changed names several times through the years and isnt even named that now presently either. Oddly enough up until just a couple years ago, it traded grey market while B and C traded NYSE. Now its Pink Sheet.
Its an oddity thing, I dont know the history of. I know the IPL preferreds have this quirk. IPWLK for example is Pink and current info, while true twin sister IPWLO is a grey market and designated as “not reporting info”. Which is crazy as its just not possible, but its been that way forever.
The common may well be better. Historically long term it has shown to be. I dont trade or own them so I really have no opinion on that.
Gridbird….thanks for the history and insight. Had I been paying more attention I to would have gone for the NMPWP. Because there is little consistency in how trading platforms express the same Preferred symbol its sometimes easy to lose track of what you’re actually doing