Goldman Sachs Group Announces New $1,000 Preferred

While we don’t cover $1,000/shares issues it is noted that Goldman Sachs (GS) will sell a new preferred.

This is a Fixed-Rate Reset preferred. This is interesting as we have seen a number of Fixed-Rate Reset preferreds this year.

The way the fixed-rate reset issues work is that they will have a fixed rate for a number of years (in this case until 2/2025) after which it will reset every 5 years at the 5 year treasury rate, plus a fixed spread.

Currently there are no plans by the company to list this issue.

The preliminary prospectus is here.

mcg pointed this issue out.

15 thoughts on “Goldman Sachs Group Announces New $1,000 Preferred”

    1. Blue, There is a whole world of these filed for SEC purposes but never see light of day for us. In fact the vast amount of preferred dollars are in the private non traded world than in the public markets. In fact historically preferreds were largely created for institutions and businesses to purchase because tax policies give corporations huge tax breaks owning them.

      1. To expand on Grid’s point, there are great preferred issues out there that are institutional only. But you can’t but them directly, not even over the bond desk.

        But you can buy them as part of a fund. My favorite vehicle, far and away, is FPF, a closed end fund. Typically, it holds about 75% institutional only issues:

        https://www.ftportfolios.com/Common/ContentFileLoader.aspx?ContentGUID=4c29a90a-463d-4ea5-b78e-958ff1606db1

        Buy when it is priced right, which it isn’t now. Pref prices are still lofty and the discount to NAV is smaller than usual.

        1. I was glad to see this, Bob, as I thought FPF might be just right for me in set & forget mode. I went to CEF & M*, which gives it 3 stars. Also:

          annual turnover 29%
          leverage 31%
          monthly div were .1625/mo in April 2017, reduced a penny/month about every year since. Now paying .1325/mo.

          None of that works for me, especially declining payout.

          So I’m back to trying to buy more of what’s available to us peons. Hopefully @5% or better – noncallable, IG, QDI, etc. Of course, that’s not too easy right now either.

          JMO

          1. yeah, I see that declining payout too, which I suppose would be a bit of concern. for now, I’ll take the 6.70% distribution rate. Monitor and look for ‘set and forget’ opportunities. I also do invest in a number of non-callables, IG, QDI since I started with preferreds but very slim pickings these days..

        2. Bob-in-DE, I actually am invested in a modest amount of FPF for close to 2 years now. However, I did buy on the higher side of $24.33. My ROI would be 10.37% if I sold it all off tomorrow. Good to know someone else likes FPF. Will likely increase my position if it drops n price a bit. thanks

  1. Use of Proceeds is for partial retirement of Ser L preferred which carries a 5.70% coupon, $25K par (NOT $25), and is fixed to floating rate. L is apparently unlisted and according to latest 10Q GS previously retired $350 mil of the issue in the third quarter.

  2. Hearing 5.125 -5.25% coupon with no color on reset premium over 5 yr tsy. Great site btw! Thanx to Grid for this website link.

    1. Prospectus: Semi annual divy in arrears, first payable on Aug 1. 2020.
      Your price: My terms?
      My price: My terms!

    2. 55 bps is a pretty small refi spread but I have a feeling GS isn’t paying the typical banking fees for preferred issuance. Not sure if they could underwrite themselves like JPM did recently.

      Will be interesting to see how this prices vs equivalent fixed resets from major financials in Canada.

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