First Republic Prices Preferred Stock

The previously announced new preferred issue from private banker First Republic (FRC) has been priced.

The company will sell 14 million shares (with another 2 million available for overallotments) with a fixed rate coupon of 4.70%.

The issue will be non cumulative and qualified.

The issue is investment grade with a BBB- rating from Standand and Poors and Baa3 from Moodys.

The new issue will trade under permanent ticker FRC-J when it begins to trade on the permanent exchange.

The new issue will trade on the OTC Grey market starting immediately under the ticker FRCJL.

The company’s press release with the pricing can be found here.

Thanks to Jerry for having the coupon 1st–very early.

19 thoughts on “First Republic Prices Preferred Stock”

    1. I think 3.07% for money you get back in 8 months is better than 4.73% with perpetual risk. But I’m going to choose neither and instead be happy with my WFC-P yielding 5.2% which I don’t believe has any material call risk at this point. WFC is going to call WFC-T first anyway but that could be any day now.

    2. I always advocate for premium over par…accepting a lower YTC knowing and accepting that par bonds will do better if rates stay the same or fall. And I’m pretty sure you do as well. FRC’s have always traded rich and these are no exception.

  1. I was hoping that the yield curve would stay normal and rates would continue to rise. That way we could get rid of these low coupons eventually. We are back to slight inversion with 3-month TBILL paying more than the 2 and 5 year.

    Looks like the beat will go on with these low rates.

    1. SteveA, the US rates are extremely “high” compared to the rest of the industrial world: Note Greece(!) has a lower 10 year rate than the US 😱
      Major 10Y Yield
      Australia 1.05 %
      Brazil 6.92 %
      Canada 1.44 %
      France -0.05 %
      Germany -0.36 %
      Greece 1.42
      India 6.48
      Italy 1.28
      Japan -0.09
      Mexico 7.08
      Netherlands -0.22
      New Zealand 1.35
      Portugal 0.36
      Spain 0.39
      Switzerland -0.58
      UK 0.64 0.06
      US 1.73 0.03
      “The hardest thing to explain is the glaringly evident which everybody has decided not to see.”
      Ayn Rand, The Fountainhead
      Nomad

      1. So are our preferred stock rates at 4.7%. That does not mean I am a buyer of new preferred’s or treasuries at these levels. I will take the 1.55% (approximate) money market rates

        1. Steve, https://thehill.com/opinion/finance/471138-negative-interest-rates-uncalled-for-in-todays-strong-economy global investment-grade debt yielding a negative rate of interest is approaching $17 trillion and growing each day. We are extremely fortunate that rates in the US are relatively high compared to most countries. No one can predict with any certainty just where rates will go and that’s why a quality income portfolio with diversification of not just varying interest rates but maturities is warranted. I urge everyone to do their OWN deep due diligence and never blindly take the advice of someone that has a vested “interest” in you clicking their article or buying their current positions to drive prices of certain securities higher.
          Time flies over us but leaves it’s shadow behind, Nomad

          1. It does not mean that you need to buy at current rates when you can achieve 1.55% in a money market account (I have one). If you truly believe in the negative interest rate scenario for the US, I would suggest high yield municipal bond fund(I own a chunk). If you believe in further drops in interest rates you could buy 5.5% – 6.0% issues that are callable with little call risk (I have several). You could go to Canada and get higher yields at a significant discount to PAR ( I own many including 5 year resets and fixed Canadian issues). So just because low rates are offered, you don’t have to buy them. I’d love to see other ideas that people have (uhaul is one but not for me).

            The point of my 1st post is we have inverted again and it looks like we are not going to get 10 year back rising in the short term. So in the short tern, preferreds will probably stay low. Of course, I still like BXS-A at 5.5% for BA1 in this rate environment. Maybe we will get more like these though I tend to doubt it.

              1. Do you mean high yield as in lower rated, or highest available yield for highly rated?

                If the former:
                unlevered: HYD
                levered: NHMAX, NVG?

              2. My favorite muni fund is MMD, it has a fixed life (end 2024) so the usual issue of closed-end funds (trading at large discounts) is avoided.

                1. I like the term approach, I like the yield, I like the fact that its NY LIfe company, and it buys a big monthly dividend. I may use it as a secondary small complement to ABHYX.

                  If you have not noticed, this is a very concentrated muni fund that appears to take a risk.

                  https://www.cefconnect.com/fund/MMD

                  State Allocation
                  As of 9/30/2019 reported by Fund Sponsor

                  Puerto Rico 30.70%
                  Illinois 9.36%
                  VI 5.30%
                  Michigan 4.89%
                  Utah 3.97%

                  I have seen some information (dated) that their Puerto Rico bonds may be insured by companies like Assured Guaranty but I need to dive deeper to make sure they still invest in only insured bonds there.

                  1. I can’t figure out why just because they carry the PIMCO name they should trade at such premiums. I will never ever be able to buy a closed-end fund at such absurd pricing vs nav.

      2. “US rates are extremely “high” compared to the rest of the industrial world”

        Yet fixed rate IG Canadian preferreds yield more than equivalent US preferreds. Not hard to find highly rated Canadian financial preferreds yielding above 5% with zero call risk.

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