Here are press releases that may be of interest as most of those below have preferred stock or baby bonds outstanding.
Newtek Business Services Corp. Reports Second Quarter 2022 Financial Results
Cowen Announces Financial Results For Second Quarter 2022
Hersha Hospitality Trust Announces Second Quarter 2022 Results
SuRo Capital Corp. Reports Second Quarter 2022 Financial Results
Stifel Declares Quarterly Common Stock Cash Dividend and Declares Preferred Stock Cash Dividend
Brookfield Infrastructure Reports Strong Second Quarter Results as FFO Increases 30
Hi Tim: I have a question about what I call “Baby Bonds”. BTW, we’ve owned 5 of them since 2020 & delighted with them. Good timing by accident/lucky me🤙. They’re all in our 3 IRA’s: PBI-B, NSS, F.C or F-C, QVCC & CTBB. I’m in a large investing group, valueforum. Also, have had a fiduciary help out since Aug ’10 as an insurance policy/he’s VERY conservative.
There’s some confusion among some of our members & it’s due to terminology: I call them Baby Bonds, others call then ETD’s or ETN’s. We have one member who insists his ETN is the same as a baby bond. I’ve copied part of his post. Could you please respond to me @ ronstaug@aol.com? TIA,Ron *BTW, the one we’re disagreeing on is the last one listed with that outrageously high yield.
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Re: any B.B. “experts” here on VF… —
Hi Ron,
I was very surprised but this security is very clearly labeled as an ETN … I am watching it like a hawk, so far have received 2x months divvy’s but it’s new to me so not too trusting yet…
Hi Ron, I have responded to you via email and if the link I provided doesn’t not load please just put in symbol CTBB. Take Care, Azure
sorry, I’m new here & don’t know how to navigate. you said “this security”. what security are you talking about since I mentioned all 5 of our “what I call Baby Bonds”. Ron
you want me to put CTBB here?
Ron–glad to have you here!!
Colloquially baby bond and etd are the same thing- Exchange traded debt. ETN’s (Exchange traded notes) are a different type of product and are more similar to ETF’s where they follow the performance of an underlying basket/index.
If I had known you were posting mcg, I would have abstained. I love your brevity. Good point about the ETN terminology. I dont play in that sector and forgot about the connection with that term for it being used there.
I’ll jump and let others fine tune as needed. Overall for us, its really debating on whether 6 or half dozen is the same thing. Notes and Bonds are all debt.
Baby bond is a term given to debt that is exchange traded on the “stock market” as opposed to the actual bond desk market and typically issued as a $25 par and redemption/liquidation price.
See historically bonds were only traded on bond desk. Then brokerages started buying bonds and putting them in a trust and sold certificates of $25 that laid claim to the actual bonds in trust. These are called “3rd party trusts”. These are a dying breed, such as KTN or KTH, since baby bonds are now being issued. Your EP-C is a unique example of an issue with convertibility (the 2028 clock is going to run out for this to ever happen) and was not issued by a 3rd party but actually by the company. These were prevalent in days gone by because of the old business tax code that was beneficial for companies to issue them like that.
ETN is “exchange traded notes” ETD is “exchange traded debt”. They both are legal obligations. For US Govt debt shorter duration “bonds” are called notes while the longer 10 and 30 year debt obligations are called bonds.
Most baby bonds I see trading typically use the word “notes”. But some dont, for example ENO is written as a “first mortgage bond”. But its a baby bond just like your PBI-B is because they are exchange traded.
I cant say with certainty but most notes I see are lower cap stack debt instruments. Typically subordinated debt which is below senior unsecured, bank debt, etc. The ENO example is higher stack being its a first mortgage bond. Your EP-C is low rung subordinated debt and lowest capital stack debt being its deferrable. Understanding the cap stack position and credit quality as well as provisions are definitely more important than the “word salad” of whether its called ETN or ETD in my opinion anyways.
I thought baby bond was not a technical term, it’s an informal description. Typically they have a redemption date not too far out, as opposed to preferred stocks that are perennial or have a very long redemption date. Maybe there’s other parts of the definition, depending on who is using the term.
It is a brokerage industry term because it causes some legacy back office systems all kind of problems, so they created a name for them.
ETN’s despite the name, aren’t really notes at all, but essentially a long dated derivative contract that may or may not pay income
This is my understanding too, but truth be told I don’t pay much attention. While I do own say 20% in names like ctbb or qvcd (but not exactly these) there are ‘technical’ reasons I focus elsewhere.
BTW current yields have been dropping like a rock. Market seems to be getting ahead of itself. NOW is not a bad time for re-evluatiuons…..
PS Now I know how that computer feels complaining about the robot checkers….That was a motorcycle NOT a bicycle!!
@if u prefer
I thought they were babies because of the lower par value versus the usual corporate bonds and notes. Almost like the normal size yoda and baby grogu.
I don’t remember the term baby bond on the S7, but that was a few years back.
Ron-
Great info in the comments. Just be sure the folks in your group don’t confuse the interest notes/BBs pay with dividends. Different animals- with interest having to be stated on the front of the 1040, just like bank interest on savings.
And – no qualified income 15% tax rate.
thanks. I’ve been a member of valueforum since it’s beginning (Dec ’03) & that’s where I spend most of my “investing time”. Lifetime members paid a modest fee in the beginning & no renewal fees. Lots of friendly folks, some I’ve met in past conventions.
Does anyone here own SuRo Common stock (SSSS)? They seem to have a pretty irregular dividend policy. I bought a small place holder position when I bought a few shares of SSSSL, but it hasn’t performed well and it seems they “missed” the last dividend declaration / payment. I’ve been meaning to call IR, but haven’t had a chance yet. Just wondering if anyone has any insight. They seem to have no problem repurchasing shares…..
Grazie Tim, sei incredibile!