Corebridge Financial Inc. has priced their new issue of Junior Subordinated Notes due 2064.
The issue prices at 6.375%. The issue low investment grade with Moodys at Baa3, S&P at BBB- and Fitch at BBB-.
This issue is a giant sized issue of 24 million shares (bonds).
Note the following from the prospectus allowing for the deferment of interest payments-
So long as no event of default with respect to the Notes has occurred and is continuing, we have the right to defer the payment of interest on the Notes for one or more consecutive Interest Periods that do not exceed five years for any single deferral period as described in “Description of the Notes—Option to Defer Interest Payments.” We may not defer interest beyond the maturity date, any earlier accelerated maturity date arising from an event of default or any other earlier redemption of the Notes. During a deferral period, interest will continue to accrue on the Notes at the interest rate described above and deferred interest on the Notes will bear additional interest at the interest rate of the Notes, compounded on each Interest Payment Date, subject to applicable law. If we have paid all deferred interest (including compounded interest thereon) on the Notes, we can again defer interest payments on the Notes as described above.
The pricing term sheet can be read here.
So what’s the symbol?
This is clearly mis-priced, wonder who was the underwriter..? Very poor job Wall Street..
WFC
What were you thinking? Higher, lower??
I think the pricing was spot on. Its investment grade
Let’s look at what Corebridge debt is yielding before this:
18 year (2042) more Sr paper at 5.775% ask ,BBB/BBB+
I continue to not understand how debt is trading at such narrow spreads to
treasuries .This is the same structure as the former bank trust preferreds, with a 5 year interest -deferral toggle.If they toggle off interest, I’d bet it never toggles back on.
Better yet, compare this to the company’s fixed advisor annuities. They last were offering more on 5 year annuities than the yield on their 5 year bonds!!
At that time I said we should buy the annuities, short the debt, and hope for financial calamity because the annuity would have super priority and a state guarantee fund.
Well, at least they are no longer offering more than 4.6 on a 5 year annuity.
The annuity has a free way out, no surrender fee. Only a market value adjustment for rate moves.
No interest in this one. Out to 2064 maturity. Not enough yield for the risk. I see more downside than upside in a market panic
Sub 7%, right to defer, barely investment grade….not for me.
Not a tempting yield for sub debt. You can find better yielding junior BBs and over 7% for IG in the bond market.