Federal Agricultural Mortgage Corp (also known as Farmer Mac) (AGM) will be selling a new non-cumulative preferred stock.
Few details are know on the new issue as of this moment as Farmer Mac doesn’t file with the SEC in the same manner as most companies. Farmer Mac was chartered by the federal government in 1987 and is regulated by the Farm Credit Administration–thus they follow rules that different from the run of the mill company.
Farmer Mac has 4 other preferred stock issues outstanding which can be seen here. The outstanding issues have coupons ranging from 5.70% to 6% with the 6% issue being a fixed to floating rate.
We will post further details as they are known.
mbg chimed in that the new issue will trade with the OTC ticker of AGMFP (always subject to change before trading begins).
EarlyBird was on this issue at 9 am this morning with Potter jumping a bit later. Yield talk is in the 5.375% to 5.50% area.
2whiteroses mentioned that he/she is unable to find prospectuses for the Farmer Mac issue. If you go to the individual security page on this site we have the link to the Certificate of Designation of Terms and Conditions for each issue.
It priced at 5.25 I believe. It was a tiny deal. For non rated pfds their existing shares trade very well. But it’s too thinly traded to move on for me. As a buy and hold it just may work out.
The other thing that spooks me is the quasi gov partnership…or the perception of that. FNM and FRE taught me to never go back to that structure ever again.
If You Prefer, they dont get them rated because its a waste of money as their debt credit ratings via the Farm Credit System are pristine.
What is the credit rating of the Farm Credit Debt Securities?
Moody’s Investors Service has assigned a rating of Aaa with a stable outlook to the long-term debt of the System and a rating of P-1 to the short-term debt of the System. Standard & Poor’s Ratings Service has assigned a rating of AA+ with a stable outlook to the long-term debt of the System and a rating of A-1+ to the short-term debt of the System. Fitch Ratings has assigned a rating of AAA to the long-term debt of the System with a stable outlook and F1+ to the short-term debt of the System. The Funding Corporation understands a number of factors contributed to these ratings, including: the Farm Credit System’s status as a Government-sponsored enterprise, which results from its public mission and ties to the federal government; the traditionally strong governmental support of the agricultural sector; and the System’s strong financial performance in recent years, including favorable earnings and strong capital ratios.
https://www.farmcreditfunding.com/ffcb_live/faq.html
Grid – I’m sure this doesn’t surprise you I’d make a comparison to TVA bonds, but the longest AGM bond I happened to see is a 2032 maturity and it’s offered at 1.52%. Compare to TVA AAA/AA+ 2033 maturity offered at 1.51%. The other maturities fall in line as you’d expect, so I guess that gives you an idea of how the market perceives AGM as another GSE… 5.25% doesn’t sound bad in relation to bonds but it seems like the other AGM fixed preferreds offer a better deal than the new issue even taking into account shorter call dates.
2WR, Yes to be clear, I dont look at any of their issues be it this one or the older others. I was just suggesting their credit quality was prestine. Im not looking to buy.
Gridbird, I’m a little surprised you are not flipping this one. Seems like an easy 1 or 2%
It may well be, Jay. I just knew it would come out today and I was out golfing. I would have had to sell some issues and shuffle around some and didnt have the time. Near term I really like what I own. I certainly would rather buy this than the new Public Storage issue that is certain.
Grid, I’m guessing that there is just too much liquidity for you! 😉
Ha! Actually these type of issues is good to have buying liquidity and popularity. Kapil, actually Im struggling to worm back into illiquids, as I only have about a fourth in issues that may not trade on any given day. Unfortunately I am very liquid right now, as the relative value is there over most bidded up illiquids.
I look at my bank issues and shudder remembering what they did in 2008-09, ha!
Yeah I can recall doing some TVA issues years ago when there really was ‘yield’ in the markets. And yes You can see their existing four pfds are trading rich. BUT I have to handle any unrated as if they are high yields due to lack of rating. I’m sure you know what that means lol.
You can still get 4 ytc on d and e tranches and that’s hard to find at this point