Do I Have a Deal for You!

I don’t really have a deal for you, but Consumers Energy, a division of CMS Energy (CMS), is selling a new floating rate first mortgage bond issue that is something to behold.

  • Here are the terms–
  • The issue matures in 2070.
  • Interest will be paid quarterly
  • Coupon will be 3 month Libor (currently .76%) MINUS .30%
  • You will be able to ‘put’ your bonds back to the company starting in 2021 at 98% of face value.

With what we know today you will be lending the company money for darned near nothing–for a period of 50 years.

Of course there are many terms beyond the above, but the unfortunate part of the story is there will probably be buyers for these bonds.

Here is the Preliminary Propectus.

21 thoughts on “Do I Have a Deal for You!”

  1. It’s “interesting”, in the Chinese sense, to read paragraph 3,4 5 of the prospectus. The put will not hold the price any where near to par. Many of the readersw here are already admitting to have to flip to get steak. Survivors in Escape from New York, I get it. We are forced to do what we have to do?
    The whole idea of a mortgage-bond on a utility which serves some widespread public good is equally preposterous. What judge is going to dissolve 100 year old plant and equipment to pay bond holders?
    I hope this IS the end of any naivete for anyone reading here. Not a downer from me, but indicates long term, broad malfeasance. These are the bozos running our country? I hope your eyes are wide open. Financial innovation? Here’s your sand-wish…enjoy it.

  2. TO TNTowanda; Thank You for your comments. I very much welcome them. I own a small position in AAPL (220 shares) but certainly screwed up back when it was $227 in March. Iam still kicking myself but will add more if we ever get a few of those ugly days like we had in March.

    1. Gee, Chuck. If you keep kicking yourself for not loading up when you had the chance, you’re gonna be very bruised. There are dozens, nay, likely hundreds of stocks that did that very same swan dive & recovery or better. ET, as just one example, about tripled off its recent bottom.

      No. It’s only what you do when it’s actually happening that counts. When everyone’s screaming and millions of people are gonna die horrible deaths in this pandemic thing and the markets have no bottom in sight and oil is actually trading for negative dollars because there’s no place to store the nasty stuff and surely this is the end of the world we know and your cojones have sought refuge deep inside your abdomen and and and…

      Remember all that for next time. Then see if you can trade it as it’s happening. If you can do that, then you’ll for sure be a man among boys, a giant among us mere mortals. No need to kick yourself at all. 😉

      JMO

  3. Wow, what terrible terms for a potential investor. While I do understand the security of the utility sector, I can’t even begin to imagine who will want to purchase this security. However, for the common stockholders of CMS – this is certainly good for them!

    1. Georges; I got some of the Boeing 40 Year bond which has a coupon of 5.93%. The cusip # is: 097023CX1. I don’t know anything about the 5 1/2.

  4. Boy, everyone outta my way…I wanna be first in line!!!

    P.S. I have some nice land in Florida for sale, too. High and dry in the Everglades.

    1. I fully agree with Bob. On a complete side note does anybody out there own AAPL besides my friend Affinity?? I cannot believe this stock. I’ve never seen a company with this huge of a market cap go up over 35% in 8 weeks time. This market is just so Crazy. From the march low of $226 to now over $302.

      1. Used to have about 1000 shares @ cost of ~$75, but got out early in the year when it got crazy high.
        Sitting at 55% cash & waiting to get more that have higher divs than AAPL- once I get those, then I might begin to trade it again.

        1. Made $$ on AAPL sold it. I don’t like stocks that act irrationally. it’s great on the way up and painful on the way down. Great financials but they must continue to innovate, i’m not betting against them just took my profit and walked. Now Facebook….there’s a stock i’ve had a long love affair with!

      2. Chuck P

        I own AAPL, Microsoft, Berkshire, J&J, etc. All now are multi generational holdings. Coupled with the Berkshire exposure I will not be adding to AAPL. But, I am almost totally focused on common of great USA companies. Another comparable stock has been NVIDIA. Over 1,000% return.

        Personally, if I had listened to those that claim the market is overvalued (which has been proclaimed for at least the last 3 years), I would have lost a great opportunity.

        The market is focused on long term not the next quarter or so. And that is aligned with my focus.

        AAPL sits on a ton of cash. It has a supply chain in China that seems stable. Its wearable division has become a cash cow. Its multiples do not seem crazy to me. When does it disappoint?

        The only “risk” I am taking that pertains to this site is ALLYA. I believe people will make car payments before paying rent. One loses nothing by letting the landlord take the loss. Hoping ALLY will call it. I only want to own short term fixed. But, certainly a risk.

        I truly admire the intellect on this site. I am slowly selling my preferred holdings. For me I focus on what I know (which isn’t investments). My strategy is/will be : 1. Time in the Market 2. Great USA common stock

      3. My worst trade ever. Owned 200 shares of AAPL in 1981 with a purchase price of $20 (that’s less than $3/share today as it has since split 7 for 1). Sold it in 82 for a small profit – because it was obvious that VHS was going to put BETA out of business in the old VCR days and I wanted to take my money and run. Next thing I know, Apple gets into computers and something called an iPhone. My $20 shares in todays world would be roughly $1800/share ($290 x 7). Do own a few AAPl shares now but oh what could have been. Now every time I make a trade and profit a few bucks the wife reminds me: “you should have kept AAPL back in 82”. Sigh!

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