Federal Agricultural Mortgage to Sell New Preferred

The Federal Agricultural Mortgage Corporation (NYSE:AGM), also known as FarmerMac has announced they will sell a new issue of preferred stock.

Filings for the issue have not yet been made but their press release can be read here.

The agricultural lender intends to use the proceeds to redeem all of the outstanding AGM-B, 6.875% issue which became redeemable on 4/17/2019. Investors in this issue were “snoozing” a bit so this means they are losing a bit. Shares were trading as high as $26 yesterday and now they are at $25.19. You can see the chart here.

The company has 2 other preferred issues outstanding which can be seen here.

15 thoughts on “Federal Agricultural Mortgage to Sell New Preferred”

  1. Farmer Mac Prices $100 Million of Series D Preferred Stock
    5:29 PM ET 5/8/19 | PR Newswire

    WASHINGTON, May 8, 2019 /PRNewswire/ — The Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A) today announced that it has agreed to issue $100 million of Tier 1 capital through the public offering of 5.700% non-cumulative perpetual Series D preferred stock, par value $25.00 per share. The preferred stock offering is expected to close on May 13, 2019, subject to customary closing conditions. Farmer Mac intends to use the net proceeds from the sale of the preferred stock to redeem the $75 million aggregate outstanding par value and liquidation preference of Farmer Mac’s 6.875% non-cumulative preferred stock, Series B and for general corporate purposes. This press release shall not constitute a notice of redemption of such Series B preferred stock. Farmer Mac expects to list the new series of preferred stock on the New York Stock Exchange under the symbol “AGM PR D.”

    The dividend rate on the new Series D preferred stock will remain at a non-cumulative, fixed rate of 5.700% per year, when, as, and if a dividend is declared by the Board of Directors of Farmer Mac, for so long as the Series D preferred stock remains outstanding. The Series D preferred stock will have no maturity date, but Farmer Mac will have the option to redeem the preferred stock at any time on any dividend payment date on and after July 17, 2024. BofA Merrill Lynch served as Sole Book-Running Manager for this transaction. Compass Point Research & Trading, LLC, BTIG, LLC, and Sidoti & Company, LLC served as Co-Managers for this transaction.

      1. According to one of my senators Marco Rubio, neither is the new US Mexico Canada trade agreement. Rubio has supported the administration on 100% of what they have asked for. He says he will not vote for it ( we shall see ). There are now some rumblings from Georgia about the same issue for farmers. So, it is beginning to appear there is something here to concern our farmers

        So, between no deal with China and a new deal with Mexico, I cannot be optimistic for our farmers.

    1. SunnyFlorida–it was a good one–just a bit too good to not get called.

      1. Tim, the temporary symbol is FMTPP. Already trading at FIDO with a little over 500,000 shares. Picked up 200 shares at $24.90. Most bidders at $24.81. Symbol recognized at Schwab.com. Not yet set up for trading. I believe that it should start trading this afternoon, just about 35 minutes.

    2. And darn, I’m on the bid at 25.19, in fact set the bid there when it was only @ 25.17 but nobody sold me any… Thanks, Fidelity….

        1. No. It is 5.7%. Still not bad relative to AGM-A. Perhaps $24.81 considering the large offering to redeem the B. Of course, market makers can be tricky these days.

          1. Thanks JohnKCal, I picked up 250 shares of FMTPP at Fidelity @$24.90 . I also picked up KMPA @$25.25 (it went ex-div yesterday).

            1. libero, you are most welcome. My limit order for another 200 shares each at Fidelity @$24.86 and 200 shares at Schwab @$24.86 were both unfilled. LOL. After I bought the first 200 shares, the bid price at Fidelity was $24.89. I was and actually am still worried that AGM-A closed today at $25.50 with its 5.875% coupon. While AGM-A is already callable, AGM-C with 6% coupon call protected theoretically should be called on time in July 2024. However, it is always difficult to guess which one should be called next, e.g. DTK called before a lower coupon for DB (Deutsche Bank), ditto for BCS preferreds (Barclay). I suppose $24.9 is still a decent play.

              1. johnkcal, AGM-C may have a coupon of 6% but at $26.13 its currently yielding 5.7%. and as you said the other two AGM preferreds are above par but callable. For me the new issue, below par is the best option.

                1. libero, I was thinking of AGM-A, already callable AND still quite a bit above par. You are correct. The new one is only way to play. Need to consider YTC and CY. Like Tim said, we all wish the coupon yield could be a little more generous. I will raise my unfilled order by a penny or 2 before the market opens tomorrow.

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