I feel a strong urge to buy something today–I have no clue what issue I want to nibble. Very likely I will add to a current position–just a nibble.
I feel like a ‘addict’ this morning–just that urge to buy. This urge is in conflict with my view that while interest rates are going to remain flat or move lower in the next 3-6 months they will be driven higher by huge treasury issuance by the government. Of course no one can predict the direction of interest rates with any degree of success – so maybe I am totally wrong (which would be normal) and we have seen the high in interest rates in which case I want more preferred shares and baby bonds. Don’t know–we’ll see.
Yesterday the 10 year treasury yield bounced up a strong 10 basis points to close at 4.65%–and this morning it is at 4.63%. Again today we have little true economic releases—just a few Fed yakkers, so we’ll see where interest rates want to go.
Business development company New Mountain Finance (NMFC) sold a new baby bond yesterday–a coupon of 8.25%. NMFC had a 5.75% baby bond which was redeemed in 2021 so they are not new to the exchange traded debt market. What caught my eye was the investment grade rating–most recent baby bonds from BDCs have been rated by Egan-Jones, but not by the big ratings agencies (S&P, Moodys or Fitch). This means that this is more interesting to me, but I know little about NMFC so will have to do some reading and understand a bit more about their business.
I see the hated AmTrust Financial declared their dividends on their preferred shares yesterday. With current yields of 13.4% to 14.2% these shares are tempting. Just wish I had a decent idea of company financials–will have to dig around.
Well equity futures are soft this morning–means very little–anything less than 1/2% moves are just normal ‘wiggles’. Let’s get to going and see where interest rates move today.