Headlines of Interest

11 thoughts on “Headlines of Interest”

1. AHH sounds like they will be calling their preferred in 6/24 from comments in 2nd quarter results.

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   1. William E – It sounds iffy to me when combined with what was said in answer to analysts. however, he does seemingly put a floor underneath AHH’s market price.

      Prepared remarks – ‘We took an important step in this process last month when our board authorized a limited stock buyback program. This initiative is predominantly meant to give us a headstart on retiring our preferred equity shares, which are callable next spring. It is our intent to eventually fully extinguish the entire series. ”

      Question and answer:
      Lou, you talked on the prepared comments about taking out the 6.75 preferreds. I understand doing that when debt was, call it, 4 something percent, but in the current environment and given that it never has to be repaid and is it treated as at least quasi equity? What’s the thought process here, especially with these interest rate caps burning off next year in the current interest rate environment?

      Lou Haddad

      Well, again, Rob, we’ll have to look to see what next spring brings in terms of rates, and whether that still may sense. Currently, with the preferred trading at a discount, we’d actually be purchasing back at basically an 8% rate. So that was the reason for the authorization of the buyback. Whatever we can get at a discount, we are going to take And then we will see what — we’ll see if the market gives us, next May when we could get some more.

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      1. Yes, sounds like they are hoping to buy most on the cheap and maybe not have a lot to call. Either way, I hold a good amount that I feel are a relatively safe 7.5 yield and don’t care whether called or not.

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2. What would you rather have – a 3 year CD at 5.40% or a 3 year note offered by State Street Bank @ 5.272%? State Street Bank just successfull8y offered $1.20 bil fixed rate notes at this price due 8/3/26 along with $300 floaters with the same maturity date…. That seems like pretty strong pricing ability on their part and perhaps a commentary on a return of confidence in bank issuers? https://www.sec.gov/Archives/edgar/data/93751/000119312523201222/d505822d424b2.htm#stoc505822_6

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   1. Is it apples to apples?

      Is the CD callable?

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      1. Apples to apples in the sense of maturity but not so much bond v CD. however, that’s half the point with CDs in general being theoretically safer thanks fo FDIC than A1/A rated straight bank debt. 5.40% was just the highest yield 3 year being shown on Fido’s fixed income page… dunno if it’s callable or not but lap off 15 basis points for callability if you will and imho the point remains the same..

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   2. Every 3 year cd at 5+% that I can find is callable.
      State Street is one of the oldest banks in the U.S. and the financials look solid. Stateholders include Vanguard, Dodge&Cox, and Blackrock. As such, the 3 year note appears to be a sound investment.
      Note: State Street has a 5.35% preferred, STT-G at $23.07, that is not callable until 3/15/2026 as another option to muddy the waters (effective yld 5.8%).

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      1. There are actually 2 STT baby bond preferreds. G and STT-D. They’re both described as F/F but interestingly now that LIBOR’s replaced, both of these are or will be fixed rate instead of floating… What makes this particularly interesting is that G is now FIXED and will remain fixed at its current 5.35% coupon, but D will adjust once to 9.008% FIXED on 3/15/24 if it’s not called. Obviously, if you own D, it’s best to assume they’re going to be called on 3/15/24 but I guess we’ll have a better handle on any wrinkle to calling on these if we don’t hear anything from WFC-q BY Monday as WFC on Q is in the same boat as STT on D, only 6 month’s earlier.

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         1. I have both STT-D and WFC-Q. I’m betting both will be called, but liking that 6%+ YTC for them. For WFC-Q, isn’t the day of reckoning 8/15?

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            1. No – wfc-q IS an unusual one as per prospectus – they have to give 40 days notice, not 30.

               https://www.sec.gov/Archives/edgar/data/72971/000119312513292504/d568311d424b2.htm

               If we redeem shares of the Series Q Preferred Stock, we will provide notice by first class mail to the depositary not less than 40 days nor more than 70 days prior to the date fixed for redemption.

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               1. So it is. I’m still guessing that it’s called. If not, the about 9% for WFC-Q is ok.

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