FTAI Aviation (FTAI) has priced their new fixed-rate reset preferred.
The coupon will be fixed at 9.50% initially until 6/15/2028 at which time the issue will reset at the 5 year treasury plus a fixed spread of 5.162%.
I see no ratings of any sort on this issue.
The issue has a provision that the coupon will increase by 5% if there is a change of control and shares are NOT redeemed.
The issue will trade immediately on the OTC under ticker FAVTV.
The pricing term sheet can be read here.
I like the ET-D shares most likely because I have an ET pipeline close to my back yard.
Also like the DCP-B in 3 months @ 4.919% + 3 month LIBOR
I would think these are safe investments but I’m just a plumber, and I don’t have the insight that Gridbird does.
Ha, Jaberstein. If I have so much insight, why have I been buying CDs? Its not because I am smart its because I am chicken. Nobody knows nothing! I dont own either of those mentioned but I do own some floaters that will largely likely trade the same way as they will. If I didnt have floaters I wouldnt have much of anything left.
I liked what Guy Adami said the other day. The Fed is the 7th or 8th inning of the rate hiking, but its only in the 2nd or 3rd inning on what it is doing to the market and economy.
FTAIN reset not too shabby. Current interest rate less @ 8.25% but in 3 years resets to 5 year Treasury + 7.378% which is >200 BPS vs. FTAIM reset.
I dont think anyone playing here was assuming a Microsoft credit rating, but the preliminary rating Fitch was zeroing in on yesterday was “B” for the preferred.
Fitch Ratings – Toronto – 08 Mar 2023: Fitch Ratings has placed FTAI Aviation Ltd.’s (FTAI) Long-Term Issuer Default Rating (IDR) of ‘BB-‘ as well as all of its associated debt and preference share ratings on Rating Watch Negative (RWN). At the same time, Fitch has assigned an expected rating of ‘B(EXP)’ to FTAI’s contemplated Series D preference share issuance. The expected rating is also on RWN. The issuance size, coupon and maturity date will be determined at the time of the issuance. Issuance proceeds are earmarked for general corporate purposes.
Glad to see change of control provisions starting to show up in preferreds given all the problems with getting delisted to the expert market. Some big names doing the underwriting so hopefully this will be a regular feature going forward, at least for smaller issuers.
Good point. Are you a taker on this one? This might be a “grey” market security for now as I’m only seeing trading volume with a $24.45 price and no inside bid/offer. Might have to wait for “FTAIM” to emerge to trade.
I’m sticking with my FTAIN for now. If I’m going to own a speculative preferred, I want upside to par to make it worthwhile.
I came to the same conclusion. FTAIN > FTAIM
Have you looked @ ET-E (near 2 decade old $40B market cap energy LP) still trading under par? Current yield near 8%ish and in 1 year floats to 5.616% + 3 month LIBOR/SOFR.
ET preferred look interesting. C and D start floating this year. (9% range) All 3 are below par. I’m looking deeper into these. Thanks Theta.
Sure thing. Couple other tidbits. K1s are issued so keep UBTI in mind for retirement accounts.
D shares float in 5 months @ 4.738% + 3 month LIBOR
C shares float in 2 months @ 4.53% + 3 month LIBOR
I’ve had the C since 2019 in an IRA, never had UBTI.
The present tax rule is it’s only triggered if income received is > $1000.
One good aspect is the broker actually handles any of the tax filing if applicable for you.
I have the ET Preferred in my IRA. My latest k-1 (and my prior ones) showed no ubti. Fidelity has reviewed them in the past and it has not raised any tax issues.