Entergy Texas Announces New Preferred Offering-Correction

Utility Entergy Texas (NYSE:ETR) has announced a new offering of cumulative preferred stock.

As usual detail are not known, but it will be a typical issue–quarterly payments, cumulative and qualified. This issue is NOT strong investment grade as I posted earlier–I looked at the bond rating instead of the preferred rating–in fact Moodys has it at Ba2 which is below investment grade.

Thanks to RetiredBroker for catching that error.

Preliminary details can be read here.

Eugene who almost always spots offerings first has mentioned the proceeds from the offering are to be used to call the EZT 5.625% baby bond, although this is not specifically mentioned in the prospectus. Shares of EZT, which became callable on 6/1/2019 have plunged from the $28.25 area to around $26.60 and can be seen here.

11 thoughts on “Entergy Texas Announces New Preferred Offering-Correction”

  1. Would appreciate if someone can provide Symbol ( Temp or Permanent ) when it is announced.

    Not sure if I will get some, but probably will if it trades anywhere below par

    1. RetiredBroker–you are correct (you nitpicker)—I was looking at the bond rating instead of the preferred. That is important and I just posted a correction.

  2. Hard to believe past call EZT was trading over 28. I don’t mind buy past call issues, but not at a 3 point premium. Am I missing something?

      1. EZT just went ex-interest on 8/29, so it is only trading with a few cents of accrued interest. Callable at any time and still trading at $26.70 today, so there is clearly a lot more downside potential for the security. Because I considered this one to be a “slam-dunk”, I tried to short 1,000 shares in my TD account. Unfortunately, they rejected my order. Quite a shame because I could have probably cleared about $1,500 on that trade, depending on how many days notice they need to call the issue.

          1. Don’t know why they have not called EZT yet but the reason it trades at such a premium is that a passive fund (ticker: PFF) has been increasing its exposure due to a recent transition in index/methodologies. The final rebalance of that transition was 31st October so EZT should go down to more reasonable levels in the coming days/weeks. Shorting is rather expensive endevour nowadays (with short interest etc), but EZT has been relatively cheap from that point of view.
            On a different note, I have seen another example where a company has issues a new preferred stock with lower yield and DID NOT specify in the prospectus that they will use the proceeds for redemption and yet they did just that a month later (the example being ALL-D).

            1. Well I had to go look at EZT which provided triple-take “what the heck”. Highly callable and traded as high as a see-it-to-believe-it 28.25 on Thursday. That would be a mightly painful call.

              1. Yes, closed with big buy imbalance on Thursday because of that passive fund I mentioned. I shorted with size and am still holding.

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