Eagle Point Credit (ECC) has made a call of numerous issues of ‘term prefeerreds’ and notes.
The company which just sold a note issue with a 5.375% coupon (ECCZ) made a full or partial call on 3 different issues.
They have made a full call on the 7.75% term preferred (ECCB) for 2/28/2022, a full call on the 6.75% notes due 2027 (ECCY) for 2/14/2022, and a 50% call on the 6.6875% notes due 2028 (ECCX) for 2/14/2022.
All issues are called at $25 plus accrued dividends or interest. The SEC notice is here.
Many issues of ECC remain outstanding–although obviously not at such lucrative coupons.
mbg and others posted this call on Friday.
So…I buy ECCX at $25.20, ECC buys back half at about $25.27 (with dividends and interest) in about one month, and the other half continues to appreciate at 6.6% until it is called or it matures in 2028. Meanwhile, the price stays pinned to par because ECC could call the remainder at any time, just as they did for ECCB. I’ve seen worse scenarios. What am I missing? Thx
That’d be right except I think your math is off.. ECCX will have 50% of it called on 2/14 and therefore will pay about 25.209 so 25.27 is overly optimistic…. and semantically, what remains outstanding does not “appreciate” until it’s called – it will carry a 6.66% current yield but you’ll lose 20 cents upon call… so it still could be a good deal for short term cash parking purposes but not as good as you describe it.. Another way to look at it is you’ll earn zippo but also lose zippo on 50% of what you buy today but you’re pretty much guaranteed that your other 50% with its 6.6875$ coupon accrual will remain outstanding at least until 3/14/22 and probably longer…
Thank you.
Regards,
Goin2Cali
Thanks for the notice. I got notice from Vanguard brokerage in my IRA account on the call on ECCY. Made a limit order for 155 shares at $25.15. Order got filled. It seems that this is around what it is worth if I waited until called. I will probably try to get more of ECC-D, no matter how outsized. eREITS common seems risky these days. I may speculate a little to buy HMLP-A, reportedly by Mrs. Behrens at Silicon that HMLP got new funding. ABR-E has been trading near par. Picked up tiny amount at $24.95 yesterday. Then yield seems more important. I have oversized number of PRIF-S already. ATLCP, with its generous 7..625% coupon, unloved since its inception makes good sense in terms of CY and YTC 7.3+%. Unfortunately ATLCP jumped up (someone in Doug Le Du’s website reported that ATLC was named as Number 1 company). I recall that this one got a nod from Gridbird. I really do not want to take more risk on HMLP-A except to learn that HMLP-A is a trading position as opined by someone at Silicon. I finally bought more of my Number 1 oversized Safe Bulker’s Inc. which was ex dividended yesterday at $25.21. Thank you Tim and thank you all.
BTW, per MSNBC, Covid Tests:
COVIDTests.gov.
Limit of 4 per address
Shipping in 7-12 days.
It seems that the scientists cannot determine what is going to happen until wait for at least 2 – 4 weeks hoping that there is no new variant following Omicron.
All my best to all. Please stay safe and enjoy.
Thank you Tim for the notice of Call.
I was able to sell my 200 shares of ECCB at the open and avoid the price drop those who are less informed are taking. Not that it is that big a drop, but every few pennies help.
ECCX, would you sell it?
No, let it get called from you … unless you have a way to be absolutely certain your shares are not among those called. My ECCB were called in the half call. I was notified of the half call, but not that my shares would be 100% redeemed. The price exceeded the redemption price+divvy, so I sold. My broker decided I was ‘short’ (In my cash account!), so I had to buy shares back at a higher price. Was this all my fault? Maybe, maybe not. I”m not a happy camper in any case. Don’t let this happen to you!
Adios, amigos.