On this page folks should comment and write about illiquid securities–preferreds and baby bonds. By Illiquid I am talking about those issues that seldom trade–or only trade in very small volumes.
We have a lot of discussion on the site about these types of securities–normally $50 and $100/shares issues and the commenting gets scattered about–by using this page we can keep this topic more centralized.
A caution to all investors, but in particular those will little experience in illiquid securities. Tight limits must be used on all of these securities–if you don’t use limits you will butchered. Also while some of these issues have been outstanding for more than 50 years they can still be called–it happens and if you overpay (pay more than liquidation price) you may be setting yourself up for a loss. Always do your own due diligence–always double check the facts–everyone makes errors (certainly I do) and you need to know the facts.
Investors should know that illiquid securities will drop like a rock if there is a large move higher in interest rates. One of my current and long time holdings has been a $50/share issue from CEF Tricontinental (TY-P or TY-) with a 5% coupon–very high quality. This issue is now trading around $56, but in its life (issued in 1963) it has traded as low at $18/share–so there should be no doubt they can move sharply.
I bought OCESP just before they went to the dark side (obligatory curse on the SEC here), fully aware of the risks. But I can’t for the life of me remember what their nominal liquidation pref is (nor can I find it anywhere). I *think* it’s $50. Can anyone confirm?
(To be clear, I’m asking only to double-check the dividend I’m being paid, *not* because I expect it to be called…)
Bur, you really should call Ocean’s CFO DANIEL CUNHA at their corporate offices in Lakeville-Middleboro, Massachusetts. He can be reached at (508) 946-1000 Weekdays, 9:00 a.m. to 4:00 p.m. Eastern Standard Time. Please report back to us, Azure
That’s just kind of out there enough I might do it…
“Hello Mr. Cunha, you don’t know me but I hold a tiny position in OCESP. Can you please remind me what the liquidation preference is for that issue?”
I’m sure he’s a gentleman and will be happy to speak with me…
Bur, the “par” value is $25 being they are 4% perpetual preferreds. I can not remember if that is different from liquidation value. These are very old. I found them dating back as far as the 1960s, but Justin here I remember found them to be dated considerably further back in time.
https://content.wisconsinhistory.org/digital/collection/cran/id/2654
You can trace them back to 1947 easily. Page 13 says how many outstanding at the time. 8900 approx. Page 20 explains why they were created. To level out coop ownership based on actual deliveries.
I imagine they created a new preferred later on so they could issue more or bought someone out who had the same setup.
What I would like to know is how many outstanding of each now days and if they still issue them? This forum could easily own > 10% outstanding or more.
micahc, how would we even buy them anymore? Are you able to place bids?
If 8850 is correct then I own 6-7% of them myself that I picked up for a bit over $14 after it went dark.
I can’t imagine there aren’t more than that floating around though if I was able to get that many. We could probably make a good run at that 8850 shares if everyone here totaled what they own.
The P series share count went up from that early period. The participating preferred O series went down over time after it was issued. It is considerably smaller than P. The only real way for an accurate share count is to email the above link and see if they will find the answer for you….You can possibly buy more shares if you can somehow get yourself declared qualified to be an “experts market” trader.
can buy anything if the other party wants to sell.
You certainly have to be more creative if your brokerage wont allow the transaction through them though.
Notes: $25 – 4% ($1) – paid 6/1 and 12/1
Let me know when you want to let them go will provide liquidity @ $16.
aha! I was missing the frequency–semi-annual rather than quarterly. All clear now, thanks.
BD
A 10 year chart for OCESP shows that it has never traded over $25 so that must have been the par value at issuance. I would expect the liquidation value at $25 , but I am basing that on the chart, not on any ‘proof’.
Grid, I finally sold my last 100 shares of AILLI @ $103 (a bit sad), I bought most of my position much cheaper in 2008-2013 and I know you follow this illiquid and others their parent backs. You still holding? All the best, Azure
Hey Azure…Soooo, it was you thumbing your nose at my 94 bid the other day. You wouldnt budge off that $103 you cheap b@stard, so I gave up, ha. I havent done much in old ute section lately. I got a shot about a month or two ago to bag a decent amount for me of NEWEN and WELPM in $106-$107 range and took advantage since that was basically a 10 year or so low. I have a couple others but they havent traded since last year. If a good sell off would occur, I would like to buy more.
Ha, it was my last 100 shares to take profit and money off the table on a lower yielding perpetual Ute. I figured someone out there would want it at 103. I remember trading the old Hawaiian Electric illiquid preferred with you and being soooo happy when I finally sold the last of them. Here I’m a bit sad, but I have a feeling we will get another shot well under par… someday
Hoping you and your family are well, Azure
BTW, anyone that wants to reach out to me, I’m on Reddit under Azurebluenomad 🛸
Shares of FIISO appeared on the market today at $150. First availability since late April. Coupon is 8.48% and yield @$150 is 5.65%. Upstate New York Bank holding company (“FISI”) is the issuer. Non-redeemable. Unrated but “feels like” just below IG. Most of these Class B shares are owned by the bank’s owners and execs. I’m not advocating a buy; just informing. Do your own due diligence.
Interesting move today in illiquid PNMXO which is a $100 face, 4.58% cumulative ute rated SP BB+. It traded 202 shares @ 84.01 down 9.99 from the last trade of 94.00 on 6/21. Current yield is 5.45%. It was issued in 1965 and is immediately callable @ 102, which holders would love if it happened. There is a question that any potential purchase MUST do diligence on. Public Service of New Mexico agreed to be acquired by Avangrid on October 2020. Appears that New Mexico regulators did NOT approve it and it has gone to court. I have no idea if/when the merger will be approved, but you would need to understand how PNMXO will be treated, if the merger finally does go through.
No positions and/or orders in any account.
this filing by PSCNM lays out the terms of the preferred. It does not seem to have a change in control call feature.
https://contracts.justia.com/companies/public-service-co-of-new-mexico-7224/contract/88622/
Ya, I tried to fine tooth comb it months ago. No angle here. Avangrid is trying to actually buy PNM Resources in which the actual utility is the subsidiary. There definitely wouldn’t be a change of control triggered because this preferred has been acquired at least once previously. So if it didnt trigger it then it wouldnt this time either.
Any Central Parking 5.25% Debentures (CRLKP) holders still out there and have you received your 2Q 2022 interest payment yet?
Last I checked there is only 44,000 shares of CRLKP outstanding. I have owned this security in the past and usually got paid by the 7th day of the following month, but not this time.
Still nothing at Schwab, but they are of course always dead last to post the funds.
Rob
I have a position in Central Parking (CRLKP) as well and have not received payment yet. I’m with TD Ameritrade.
Guys you all will get it damn well on their time not yours, lol.. And dont blame the trust company who pays as they always distribute cash to DTC on time. It will be random but it will come…For example in January for TD was 1/20…Probably New Years Eve hangovers contributing to the near 3 week delay. In April they feverishly worked overtime to deliver the interest payment 4/13. Less than 2 weeks late that time.
Rob—I also own this issue. where does one look to find the # of shares outstanding? Thanks.
Annual filings under debt…. Divide by approx 1.1 million outstanding by 25 gets you the approx share count.
Subordinated Convertible Debentures
The Company acquired Subordinated Convertible Debentures (“Convertible Debentures”) as a result of the October 2, 2012 acquisition of Central Parking Corporation. As of October 2, 2012, the convertible debentures were no longer redeemable for shares. The subordinated debenture holders have the right to redeem the Convertible Debentures for $19.18 per share upon acceleration or earlier repayment of the Convertible Debentures. The Convertible Debentures mature April 1, 2028 at $25 per share. There were no redemptions of Convertible Debentures during the years ended December 31, 2021 and 2020, respectively. The approximate redemption value of the Convertible Debentures outstanding as of December 31, 2021 and December 31, 2020 was $1.1 million.
Grid—thanks. I bought 863 shares at $23 recently after it went xd. My YTM is 6.89%.
My last payment hit my Ally.com account on April 13th.
My last Central Parking payment hit my Ally.com account on April 13th.
I called schwab about the central parking payment. After 90 minutes on hold while they “researched” (and I pruned apricots), they came back and said they would need to do even more research and would email me.
I suspect it was just time for the guy to go to lunch — no email, 2+ hours later, but we shall see.
At least it wasnt a total waste of time for you, ha. Its useless pushing on the string. They know nothing (at least the front line boys). It will come in due time. I didnt get mine until the 20th this past January. Inquiring only 13 days after you should have been paid? That is calling way too early, lol.
You are right, Gridbird.
Got an email back this afternoon.
“We expect the July 1st dividend to arrive within the next week or so.”
Not very helpful.
Private, doing summer pruning after harvest? what varieties are you growing?
David P: How about the July 1, 2023 – did that one hit your Ally account yet?
CNTHP went xd today and I bought 500 @ $52.48 which is a 6.25% yield on a perpetual rated Baa2 and BBB+. Someone wanted out and just hit the bids. It traded as low as $51.59 and closed at $54 on above average 1.3K shares.
Congrats, good buy, Randy.
SLMNP is showing in TD as bid-ask of 1017-1130 with a last trade of $990.
Is this real, or just junk info in TD?
Some brokers would not even allow you to sell , and others do not execute sell orders even below 1017.
I guess, we will have to hold SLMNP until eternity?
On the OTC site looks like some “expert” bought 105 shares starting at $802 and ending at $990. Some lucky folks sold it at a reasonable price. See here https://www.otcmarkets.com/stock/SLMNP/quote#trade-data. I owned a bunch but got out before it went to grey market. However, I do hold quite a bit of KTBA so am in the same boat. Might be worth keeping a standing sell order in case lightning strikes twice.
I own two shares of it. For the one share in my fidliety 401k plan, I have an open limit order to sell that the price I paid. I may lower that some after I collect a few more dividend payments, but I don’t think I will set it below $1,000. Who knows, maybe some crazed buyer might take it from me someday.
My other shares is in a Merrill Lynch Edge account which doesn’t seem to want to accept a limit order for this stock. I think I might be “stuck” with that share forever.
At ~$800, slmnp yields >7%, so maybe, as was mentioned before, we should consider it a perennial annuity, hoping slmnp continues to pay the distributions.
I wonder if there is ANY broker that actually executes sell orders for slmnp
I have done multiple google searches about this topic and there is no way an ordinary person can buy expert market securities from a normal online broker. Now this does not count special client services I do not have access to or any such thing but it is a hotly discussed topic on a few forums and everyone has failed that I know of. There my be a few exceptions of certain securities but beyond that if there was a way it would spread like wild fire among people like us.
P.S. Ocean Spray paid this late June/July like clock work.
Fc,
Thanks 4 ur reply. So, no known way to buy slmnp, but what about selling it if u already hold it? It seems this also can’t be done , at least in the brokerages I have tried: either the order is rejected, or stays “open” without execution even if the ask is low.
I have to admit not trying that lately. I did in the past with ally and the order was open when trying to sell but it has been many months since I last tried again. I thought it was perfectly fine to sell expert market securities but it would be odd doing it. Meaning if 1000 was rejected you might have to try 950 next. And so on. Until the sell order sticks. Perhaps. Just guessing. Not something I wish to try. Knowing my luck it would get sold doing the experiment at some low price.
I plan on keeping my SLMNP, OCESP, etc… I knew what I was getting into.
You can sell if you match against a buy order. These names are usually very thin without a real orderbook so the odds that you match against a contra-bid or offer is low.
I still have some shares of AATRL. I have had a standing order to sell at $54. It actually traded through that a couple times a while back. But I never got an execution. No NBBO, so my order must have been sitting in the wrong place.
I’m happy to hold my position in AATRL. With a 52 wk high of +$190, AMG’s conversion strike of $254 is not so far off that inflation or a buy out wouldn’t deliver a +$100% capital gain based on my buy price. Meanwhile ROIC is been ~7%/yr in an IG issue.
Thanks for this link, Fryman. Somebody got hit hard at the close, getting only $662 for 10 shares of SLMNP today.
well thats a bummer, It traded through my bid.
MCG, what broker are you able to place buy orders for SLMNP?
I’m an institutional trader, we don’t use brokers in the traditional sense.
Gotcha, thank you
Don’t forget, there is an always optainable absolute floor on the price of SLMNP due to your ability to put it back to LYB at any time… The exact price according to TDA Corporate Actions is $848.2742. I double checked when an “expert” paid someone $785 on May 24. It was reassuring to discover Corporate Actions had the info at its fingertips and a simple phonecall could initiate that backdoor escape if need be. As far as the 1017-1130 quote, I know looking at my TDA account via ThinkOrSwim has always shown a price that was what SLMNP was the day it went dark, so has never been accurate since then. I do not remember if that number equated to 1017-1130.
Mid-year thoughts. All of the Alabama Power “legacy” preferreds are gone–a curious time to call a bunch of 4-5% issues. Nothing this year thus far on Ameren or Connecticut Light & Power and, with rising rates, it seems unlikely that any redemptions of these issues will occur–though a few high coupons hang out there. The non-redeemables and busted convertibles (Pacificorp, Wisconsin Power, New England Power, Southern Cal Gas, RP, etc.), with a few exceptions, trade at much lower prices than has been the case for a decade (perhaps excepting for March 2020)–but available shares continue to be infrequent and are gobbled up quickly. Their yields are, generally, a bit lower than other IG preferreds but still look pretty attractive IMO. And the few bank non-redeemables (B of A and Wells) are trading at 6% yields give or take. Anyone have thoughts on these for the balance of the year?
For me, the most disappointing aspect for some of these legacy issues is that Fidelity, in its infinite wisdom, now restricts their trades–even though none have moved to the Experts Market. It’s ridiculous and screwy. A great example is NEWEN, owned by National Grid. When you dig down on the Fidelity website for a quote on this IG, the company profile speaks about Novagold Resources–a mining company having nothing to do with NEWEN. Fidelity also cites this issue as being variable rate; it’s not and has never been. Can’t fight city hall or Fidelity! Happy 4th to all and, as always, thanks Tim for conceiving of and maintaining what is far and away the best preferred stock website in the industry!
Yes, Oldman, WELPM had close to 3000 shares gobbled up the other day in a couple minutes at $107.50. I already had 400 I just recently bought at $106, so I passed. Besides that is a decent amount for me to hold anyways. I also have a couple hundred of NEWEN bought at these low levels also. It only has a 13,000 or so float so they are available less frequently typically than WELPM with a 44,000 share float or so. I purchased these at the 5.6% ish range and scalping a quick divi too or about to with WELPM.
I prefer the subsidiary preferreds over hold co, but most despite recent sell off are still pitifully trapped in the 4% yield range. Too low to stomach for me, being perpetuals, but I watch none the less.
Keep an eye on this one if it gets below par. PECO 5.75% 2033 subordinate debt that trades on bond desk. Its basically like KTH except different maturity, yield, and a bond desk issue. This is noncallable. But you have to decide at what yield is satisfactory for a 11 year hold as I view it as a marriage with an expensive divorce if you want out. I recently bought some near par and am just holding, looking for a better price to buy more. For me it helps balance out the other crap I hold.
https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C166697&symbol=EXC.IZ
Oldman—I follow BAC/L and WFC/L and have lower price orders on both of them. I just think they’re too high and will go a lot lower if/when yields rise. If/when some fund (or other institution or individual) wants out, they just hit the bid. One needs to be patient. I just renew my orders every 60 days.
Randy,
At what level are you setting your bids. Thank you.
Bill
Bill–BAC/L at a 6.5% yield. WFC/L at a higher yield because I already own a bunch of it and recently bought some more on 6/22 at 6.5%.
HAWEL, Hawaii Electric $20 face 5% coupon, immediately callable @ $21, hit an 8 year low on 200 shares @ 19.29 today. Not sure if any more are available at that price or not. Down 4.61 from previous close of 23.90 on 5/2. That is a 19.3% drop. . .
We have no positions and/or orders in any account.
GMLPF made the highlight reel today. Every since it went to the “expert market” related to the Rule 15c2-11, it has shown increased volatility, like many others that went there also. Today it closed @ 22.50, but had a 400 share trade @ 19.00. Last year on III, some speculated it would be called on its first call date of 10/31/22, 6 months from now. I don’t follow the company close enough to have an opinion, but if it were called, obviously it would be a home run.
The reason I bring this up is that it is buyable on some platforms as others have reported. I am not sure why this expert markets issue is buyable and others are not. If you are interested, your broker might let you buy it. . .
Alas, not on TDA. My bid @ 19 was rejected as soon as I hit the buy button.
Not allowed on eTrade either:
“Opening transactions in Pink No Information, Grey Market and Expert Market securities are not permitted due to the inherent risk associated with these products.”
Thanks for the safety net eTrade…
GMLPF is one of my larger speculations. I’d get longer at the right price.
Likewise. I’ve only heard of random buys where an order might be accepted today, but not tomorrow. I’d be ok with buying more at $19!
FWIW, I was actually allowed to place a GTC (limit) order on Fidelity that just expired last week. Price as listed has above and well below, but nothing every happened.
Old PFX update. Landlord and I discussion got my curiosity going as I know several here own the old PFX (Phoenix Life now renamed Nassau Companies of NY). I have owned it for years and just collect the 10% plus coupon quarterly interest payment and dont really follow it being its private. But…here is some good news as AM Best a few months ago (AM Best is an insurance co. rater) gave it a credit upgrade…It got a double notch positive bump I see.
Nassau Companies of New York—
— to “bb” (Fair) from “b+” (Marginal) on $300 million 7.45% senior unsecured notes, due 2032
Every since I purchased it years ago, its been hold until 2032 maturity, or bust, or untimely death whichever comes first.
https://www.businesswire.com/news/home/20211217005602/en/AM-Best-Upgrades-Credit-Ratings-of-Nassau-Financial-Group-L.P.’s-Insurance-Subsidiaries
Looks like its last trade was $18.15 yesterday which puts it at a present 10.26% yield. Its YTM of 2032 is considerably higher, but Im not bothering to do the math. I just want my next payment on time again in July. And judging by credit upgrade this seems to be a reasonable outcome.
Fidelity has restricted NEWEN (6%), one of the few noncallable Ute preferreds. The only explanation I can get is that as part of its consideration to remove its trading restrictions on fixed to floating preferreds, it decided to restrict any preferred for which it could not locate a prospectus! NEWEN’s parent is Nation Grid (NGG), and the issue is decades old. NGG covers NEWEN in its 8K. When you look at the detail on Fid’s website for this issue, you find narrative about “Novagold Resources” in the “Company Profile.” My efforts to get this rectified fell flat. Anyone have more info about this and suggestions for getting the restriction removed. I’ve written Fidelity and, without success, tried to get to someone in its Compliance Dept.
O – This probably won’t help much but maybe you can convince Fido that this could be considered the prospectus for the issue…They’ll probably then come up with some other excuse anyway, but See Article I on https://www.sec.gov/Archives/edgar/data/63073/0000071297-96-000028.txt. It mentions that N/C 6% specifically and then goes on with language very similar to a prospectus that would cover not only that preferred but another as well…… It’s grasping at straws, but maybe it’ll help. Sorry I don’t see any page numbers but the Article is easy to find……
Thanks 2White. I’ll see if Fid will accept this…IF I can speak with anyone empowered to do something (unlikely). I’ll write to them again, if necessary.
Oldman, Just thought of you. I just bought 100 of NEWEN today at $108. Used to buy and flip in the 120s to 140 range a while back. $108 though not inspiring in yield at 5.56% is running around about over decade pricing low. Plus it was one last chance to spit in the eye of Vanguard, because they are shutting down all OTC trading real soon.
As usual Grid, Nice Buy! Fidelity still restricting NEWEN purchase. Probably going to move my trading elsewhere. Last I looked, NEWEN ask is back up to $127.70. Opportunity lost for the rest of us!
Oldman, I dont have a Fidelity account but occassionally I get preferred info from their quote site. And for many issues like lets take UEPEN as an example, they have the call date and issue dates and such there.
https://eresearch.fidelity.com/eresearch/evaluate/snapshot.jhtml?symbols=UEPEN
Now notice they dont have anything on NEWEN, thus showing why they are balking on trading.
https://eresearch.fidelity.com/eresearch/evaluate/snapshot.jhtml?symbols=NEWEN
$127 IMO is not serious offer to sell. But with a tradeable float under 10k shares and most institutionalized, your going to get that often. And then these can dry up where buyers lose interest also from lack of trading opportunites.
Can you challenge Fidelity to update NEWEN, by showing them where to look?
Not sure If moody’s or S&P have a rating for it, but some of the rest of the information is available.
Thanks Justin. Already sent them the 25 year old data on the old NEWEN info (from New England Power Co.) as well as several links to 8ks, etc., most recently from National Grid, the parent–some of whose filings reference the issue and provide some detail. Fidelity shows this as a “fixed to floating” and it’s not. As previously mentioned, when you look at the NEWEN detail on the Fid website, under “Company Profile” they show info for Novagold Resources, which has nothing to do with NEWEN. It will not matter what I provide unless someone internally decides to own the problem and fix it. It’s so minor, that my chances of accomplishing this is remote. They erred with this but….
Oldman, I thought you would appreciate this. The preferred was originally issued in 1913 so the prospectus paper maybe a bit yellow. Also, the float is roached out with little left now and New England Power issued a tender for $116.50 in 1997.
Public Offering=Baker Ayling & Co. offered 10,000 shs ($100 par) at 96 in Mar 1913. Company offered to stockholders $250,000 at par in Feb 1914. Baker Ayling & Co. offered 2,500 shs at 97 1/2 in March 1914. Baker Ayling & Young, Boston, offered at 95 in Jan. 1919. Baker Ayling & Young, Blodget & Co. and Arthur Perry & Co., all of Boston, offered $1,250,000 at 100 in July, 1921
Purchase Offer=11-97 by New England Electric System for all outstanding shs at $116.50 per sh. Offer expires 12-12-97
Won`t the rest follow?
Vanguard tightens its grip on the Nanny State!
Beginning April 28, 2022, Vanguard will no longer accept purchases and transfers in of most over-the-counter (OTC) securities. This change allows us to better support a targeted, enduring suite of products and services rooted in Vanguard’s time-tested investment philosophy and built to help secure the long-term success of investors.
That is my cue to close those accounts. I will miss their bond assortment though. The 401k for my LLC will be the toughest thing to move. More hoops to jump through.
I have TD, Merrill Edge, RBC, and Fido accounts so I might as well go for an International Broker account now since TD and Schwab are combining.
I have TDA, Fidelity, and IBKR. I have been buying lots of Canadian oil and gas stocks via IBKR so I like it. They are not as polished as TDA, but their margin rates are minuscule. I play the ex-div sometimes since margin rates are so low. Here’s a referral link if you are interested. https://ibkr.com/referral/jeffrey943
I did the pro version purely for the lower margin rate. I started with the lite until I got familiar with it. Let me know if you have any questions, if we need we can take it off here.
I only use Fidelity for HSA and 401k.
Gridbird,thoughts on what that will do to the illiquid market?
Lou, as long as none of the other walking penquins try to fall in line here, it should be immaterial. Vanguard hasnt been a fan of these anyways. They dont allow foreign OTC issues such as Enbridge already. Hell they never allowed any OTC transfers in to begin with, as I tried several years ago. Vanguard didnt charge for these trades so I assume it cost them more. So they are just ridding themselves of issue instead of applying a charge.
I only had one in it to begin with. The few others are in another account to begin with. Most illiquids I tradk are only now starting to cave and need to cave more for me to get back into.
Grid:
Remember the good old days when an illiquid preferred ute like CMS+B hardly caved at all during the March 2020 preferred carpet-bombing?
Those days have gone the way of the dinosaur. I’m finding the current environment much more challenging than even that Spring 2020 period.
On a different note, PFF continues to get hammered with outflows. Now nearly $1.5B in 2022 for this $16.8B preferred behemoth. They did something noticeable two weeks ago. They took their cash position up from only 24 basis points to 220 basis points – and have kept it there since.
With nearly $400 million of cash on hand (the fund’s 2nd largest position), it seems like they are preparing for even more outflows.
Keep your head on a swivel in preferred land!
Hey Rob. They did what they were supposed to do. They gave you time to get out as the liquids started their descent. I have been out of them for largely 4-6 months now. Just own a couple that I wont sell…And BANGN I cant as I took it to the dark side, lol, being its experts now.
In fact I would suggest most are still priced way too high compared to what is happening in liquid land of 5% par issuances. I basically rotated into term dated, adjustables and way above market yield for their relative quality (ala, CEQP-). But every trade or buy brings on a sell to raise even more cash.
The preferred market overall is performing in a very logical if not predictable manner lately. I just have to keep staying disciplined. Im doing enough trading to make up for a few Im a bit early in….And letting my adjustables and term dated issues run.
Im not interested in CMS-B, but am very much so in CMS-C if it can dig down to 6% land.
WFC-L just hit 52 week low and now has hit the 6.0% mark. The beatings will continue until the morale improves. I have resisted the urge to play perpetuals except for a few trading issues for quite a while now… Would someone please kindly ring the bell loud for me when the perpetuals have bottomed out, so I can reenter, lol.
Grid—I bought 15 today at 6%. Just going to buy high quality issues periodically as they drift lower as I somehow doubt they’ll ring a bell at the bottom. However, if God comes to me in a vision and announces we are at the bottom, I’ll post it here first after I load up.
Dont forget to Randy, I am holding you accountable, lol… Historically speaking 6% for HQ perpetuals has been a reasonable hold. So I definitely understand your toe in process. Overall, we just havent got a wash out that occurs considering the environment we are in. During 2013 taper tantrum, when Funds rate were still at 0% and 10 year briefly popped above 3%, WFC-L went well under $1150… Heck, I was just looking at 5 year CD yields. Still under 3%. I helped buy my parents a 5 year CD just 4 years ago still paying that is 4.5%. Terrible!
Last time inflation was this high they had to raise interest rates a lot higher than they are planning to this time.
We just have to hope that coming out of a pandemic things will be different this time.
But if it is not different, prices on these perpetuals have a long, long ways to fall yet.
While prices can fall more we were almost desperate for yield 12 months ago and now here it is on a silver plated platter (not solid silver yet 😉 ). Eventually one has to start buying. Normally when people are fearful to buy has been the best times to start buying. So WFC-L has not been at this level since 2016-2017 ignoring covid. So I try not to over think things here. 6% is pretty good for sitting around on your rear just collecting dividends from a solid company. Might it be 7% 12 months from now? Could be. But missing out on that is not exactly life changing. You just have to open up your brokerage account, ignore the paper loss, and life goes on.
And just now I finished slowly buying up my 100 shares of SR-A using just dividends and interest paid out recently. Feels good. Now to find the next target. 6% seems decent to target next.
FC, some here have reached out to me via email and asked what I was buying. I decided just to post occasionally, but these are not recommendations and I urge everyone to please do your own deep due diligence. I bought 30 busted convertible bonds of REDWOOD TR INC SR UNSECD NOTE CONV 5.625% 07/15/24 CUSIP 758075AD7 @ $97.00 YTM 7.092%. These are right for my portfolio, but that doesn’t mean they are right for yours. In Latin we say, Potes tantum decernere quid sit fas an malum, Azure
Azureblue, Most grateful for your posts! Using IBKR I cannot locate the Redwood Trust note. Might I ask which platform you purchased from?
Vanguard, you are best to call their corporate bond desk and gave them the CUSIP. I like Vanguard for corporate and municipal bonds because their fees are so low, the representatives are so helpful and they have a massive inventory. Hoping you find your treasure, Azure
Get it on, bang a gong, get it on…………..
What is your opinion about Corteve preferred stocks? Namely cta-a and cta-b
Can anyone provide information about BACRP? Cannot find a prospectus. A CUMULATIVE, perpetual, non-redeemable 7% B of A preferred. Very few shares outstanding and seldom trades. Holders have voting rights. Issued in June 1997. Any more info would be greatly appreciated. Thanks.
I tried finding out about this one as an exercise Oldman. I didn’t get very far but what I did find was that it’s mentioned in the 10k from 1998 https://www.sec.gov/Archives/edgar/data/70858/0000950168-98-000724.txt as having a “Specimen certificate of registered 7% Cum Redeemable Preferred Series B incorporated by reference to Exhibit 4(q) of registrant’s Annual Report on form 10k dated March 10, 1997 (the 1996 form 10k)” https://www.sec.gov/Archives/edgar/data/70858/0000950168-97-000739.txt
From https://www.sec.gov/Archives/edgar/data/0000070858/000095016897000739/0000950168-97-000739-ihttps://www.sec.gov/Archives/edgar/data/70858/0000950168-98-000724.txtndex.htm I can see where there is a Exhibit 4(q), but good luck finding it….. It’s got to be there somewhere but darned if I could find it.
I think you might be looking for this one? That’s from the Nationsbank 1995 annual report, which is the one referenced by the part you found.
https://www.bamsec.com/filing/95016896000536/8?cik=70858
It’s less pretty but you can find the above part in the whole text back before things were broken up.
https://www.sec.gov/Archives/edgar/data/70858/0000950168-96-000536.txt
xerty – just looking on the headlines, no details, on what you linked, that looks to be for an 8.75% preferred and BACRP is a 7% preferred… Somewhere in either one of the 2 10ks I was looking at it also said that the 7% preferred was issued in ’97… I was wondering the same thing though that maybe it’s an assumed preferred from either Nationwide or Boatmen’s… I eventually lost my interest in the exercise but hopefully Oldman took up the challenge.
I own this issue after entering a low GTC order and waiting just less than a year to get filled. Someone sold a decent amount (can’t remember exactly but maybe about a thousand shares) and tripped off several GTC orders including my 200 at $107. The spread can be $50-$75 per share. I bought as a long term holding. I guess, following Grid’s plan, I could enter a very high sell order and just wait to see if it gets filled.
Even BofA doesn’t post anything.
it is listed first on this page.
https://investor.bankofamerica.com/fixed-income/preferred-stock
No CUSIP (which is available), ticker (which is also available)
and those two high coupons on the noncallable ones must be driving the corporate treasurer crazy…
OK, we’re getting somewhere – The issue is apparently one that was inherited from Boatmen’s Bancshares Inc as per https://www.sec.gov/Archives/edgar/data/70858/0000070858-97-000050.txt Exhibit 99.1
It looks like this issue is CUMULATIVE, has VOTING RIGHTS, and is REDEEMABLE AT THE SHAREHOLDER’S OPTION AT THE $100 PER SHARE STATED VALUE. How odd and seemingly extremely shareholder friendly terms:
Note 15 PREFERRED STOCK
At December 31, 1996 and December 31, 1995, there were outstanding 9,341
shares and 9,609 shares, respectively, of 7% Cumulative Redeemable Preferred
Stock, Series B, $100 per share stated value. Dividends are payable quarterly.
The stock is redeemable at the stated value at the option of the holders and
has equal voting rights with each share of common stock.
From https://www.sec.gov/Archives/edgar/data/70858/0000950168-98-001733.txt:
NationsBank Series B Preferred Stock
The NationsBank Series B Preferred Stock was issued in connection with the
merger of Boatmen’s Bancshares, Inc. with and into NationsBank on January 7,
1997.
Preferential Rights. NationsBank may, without the consent of holders of
NationsBank Series B Preferred Stock, issue preferred stock with superior or
equal rights or preferences. The NationsBank Series B Preferred Stock ranks
senior to NationsBank ESOP Preferred Stock and Common Stock, but ranks junior
to the NationsBank Series BB Preferred Stock with respect to dividends and
distributions upon liquidation.
Dividends. Holders of shares of NationsBank Series B Preferred Stock are
entitled to receive, when and as declared by the NationsBank Board, out of any
funds legally available for such purpose, cumulative cash dividends at an
annual dividend rate per share of 7% of the stated value thereof, payable
quarterly. Dividends on NationsBank Series B Preferred Stock are cumulative,
and no cash dividends can be declared or paid on any shares of Common Stock
unless full cumulative dividends on NationsBank Series B Preferred Stock have
been paid or declared and funds sufficient for the payment thereof set apart.
Voting. Each share of NationsBank Series B Preferred Stock has equal voting
rights, share for share, with each share of Common Stock.
Distributions. In the event of the dissolution, liquidation or winding up
of NationsBank, the holders of NationsBank Series B Preferred Stock are
entitled to receive, after payment of the full liquidation preference on shares
of any class of preferred stock ranking superior to NationsBank Series B
Preferred Stock (if any such shares are then outstanding) but before any
distribution on shares of Common Stock, liquidating dividends of $100 per share
plus accumulated dividends.
Redemptions. Shares of NationsBank Series B Preferred Stock are
redeemable, in whole or in part, at the option of the holders thereof, at the
redemption price of $100 per share plus accumulated dividends, provided that
(i) full cumulative dividends have been paid, or declared and funds sufficient
for payment set apart, upon any class or series of preferred stock ranking
superior to NationsBank Series B Preferred Stock; and (ii) NationsBank is not
then in default or arrears with respect to any sinking or analogous fund or
call for tenders obligation or agreement for the purchase or any class or
series of preferred stock ranking superior to NationsBank Series B Preferred
Stock.
Thanks to everyone. The Boatman’s/NationsBank explanation makes the most sense to me. It explains why there is no BACRP prospectus, per se. The 7% coupon is consistent. Best comment was Justin’s “..the non-callable ones must be driving the corporate treasurer crazy…” This issue is so small that it likely seldom is a topic of discussion, I would guess. I think that this non-redeemable, perpetual preferred with a comparatively high coupon is an unintended consequence of B of A’s aggressive acquisition strategy the last century. I only wish I had more shares (I came in on the tail end of the last “dump” and got about 30 sh on a year’s old GTC order). Again, to the III community, thanks for your research and for the comparative wealth of info you provided.
There are only about 7k outstanding and been whittled down greatly over the years (especially 2008-09 crisis) Not any material effect on their balance sheet at all. There are several of these noncallables running around on a few companies balance sheets. MSEXP has a float down to about 800 shares being its an uncallable ilk too.
There were only 35,046 shares outstanding upon closing of the Boatmen’s merger – https://www.sec.gov/Archives/edgar/data/70858/0000898822-96-000362.txt which confirms the creation of the BAC shares for the Ser B Boatmen’s preferrred with identical terms as the original Boatmen’s preferreds
I did a lot of research on this one when I snagged 100 around $110 last year, but somebody bought them from me at $169 a short time later. I only remembered parts of this all so I didnt want to dig into it again, so I stayed out. A lovely issue get for Randy. I gave up on trying again, and shouldnt have, but his persistence paid off and good for him!
the driving them crazy was not aimed at the interest expense, it is the amount of work they have to on the corporate books because it is still alive and there is no way to get rid of it
How is there more work with this issue than any old subsidiary preferreds of utilities that have been on the books since the 1940s and have been callable since WW2 and they havent redeemed them?
Compared to a UTE, there really isn’t, but financial institutions generally know better than to issue non-callable.
and that 100 redemption provision is interesting as it puts a floor under the shares, and allows anyone who knows about it could be a way to take advantage of a buy below 100.
And it appears people took advantage of that put back during the bank crisis. As I remember researching a year ago, the float shrank more during that time. Bank preferreds were pummeled back then so that put was immensely beneficial.
Its hard to gather an opinion on whether the terms were appropriate or not because we would need to know the financial condition of Boatmens at the time, and who it was issued to. It could possibly have been an insider goody bag issue like FIISO was. And that came at the banks origination. Boatmens was a small regional MO bank at one time as I remember it. It was one of those a fish swallowing a fish, swallowing a fish, swallowed by a whale thing.
So its not out of the realm of possibility the issue was sold to the people who initiated the need for it.
As far as cumulative goes, it was not out of ordinary for cumulative to be issued a few decades ago. I notice a Fleet preferred acquired by BAC and a Citi one also that was cumulative that show on Quantum and that was recent past. 2008-09 new regs killed off the cumulative variety.
Justin, I thought your comment was funny and great. BACRP is a very minor nuisance for B of A, but a nuisance nonetheless. Funny that they don’t float an aggressive tender offer to rid themselves of it. But, it is so small that any attention paid to it by B of A probably has become boilerplate in SEC filings.
Three $50 par Connecticut Light preferreds were the big losers today.
CNLHO, down 9.8% to 44.00. 4.5% coupon
CNLPL, down 4.2% to 58.69, immediately callable @51.84, 6.48% coupon
CNLTN, down 5.1% to 42.25, 4.0% coupon
Might be attractive if you are looking for UTE’s on sale
We do not hold any of these in any account.
52 week lows in three Hawaiian Electric preferreds on tiny volume:
Ticker, coupon yield, current yield, today’s price change %
HAWEM 5.0% 4.61% -7.5% NEGATIVE Yield to First call
HAWLI 4.75% 4.97% -6.2% Not sure what call price is, $21.00?
HAWLL 4.6% 4.88% -5.75% Positive yield to first call
All are immediately callable, but as noted before HE does not seem inclined to call them.
We have no positions or orders for any of these in any account.
HAWLM which is a 5.25% issue is probably the one to watch the most. Last trade of a 100 block at 21.25. Redemption is 21. The rest pay too little for me to personally watch them anymore. (full disclosure, i own some HAWLM).
HAWEL/HAWEM/HAWLN (all 5% I believe) would be next but redemption is only 20 for HAWLN… so be careful there.
I used to watch the ills like a hawk but I have lost interest in them until they collapse in price more. It may take a while. That leaves me with a tiny handful to watch that frankly trade so little it is almost pointless and buying enough to move the needle is quite difficult.
HAWLI can be called at $21. Looks like 500 shares was burning a hole in someone’s account. I bought quite a bit on a day last Fall when thousands of shared traded hands. They have been around for 70 yrs, so I don’t really look at these. Today i saw them because my account went red, and was wondering why.
Another strange one today. Vornado $50 face, convertible into common, VNORP, traded 9 shares @ a 10 year high of 225, up from the last trade on 2/11 of 82. That is a 174% jump! And VNO common was down, so it is not trading on the common price.
Beats me why somebody would pay $225 for it.
We do not own it in any portfolio and/or have any open orders.
Union Electric UEPCP, 52 week low @ 90.31 down 3.69 from previous close of 94.00 yesterday 2/24/22. $100 par issue, 4.3% coupon, current yield= 4.76%, callable anytime @ $105.
We do not own it in any account or have open orders.
It dropped that much on share volume of 138 shares. I have been watching the bid floors dropping on these old low par issues as well they should. It just takes time. A price rerating will occur with the liquids selling off hard these past couple months. Its hard to see much relative value IMHO at say $90.31 for a UEPCP, when Alabama Power 5% is back bouncing around near par. And I cant say much for any value now in it either, ha.
Personally I am down to my lowest ute preferred percentage ever and been that way for several months now. Dont like it, but most are low yielding perpetuals that are sitting ducks price wise.
A year or so ago, over 40% of my portfolio was in a variety of IG, illiquid ute preferreds. All but a couple hundred PPWLO and an odd lot of WELPM are now gone.
But I have maxed out Ibonds in every way possible and my energy holdings are a real hunkaburninluv.
Even my investment cash is currently higher than it’s ever been.
Interesting times.
Camroc, Just continue being the jockey that whips the horse until the finish line. Dont let up! And also, make sure you outlive me, because if you dont, I will be prying those 3% fixed plus inflation rate Ibonds from your cold dead hands. 🤣
Here are the utilities that I show with current yields >=5.0%, non-convertibles, yield to first call >0.0% and currently paying. These are both preferreds and babys/terms. (I would have included that in the data, but when I add more stuff, it thinks I am a spammer.)
Ticker, current yield, comment
CTGSP 11.1% Non-tradeable
VIASP 8.7%
AQNA 6.5%
NI-B 6.2%
SJIJ 6.2% New risk of being taken private
SCE-H 6.1%
SCE-J 6.0%
SR-A 5.8%
AQNB 5.8%
SCE-K 5.8%
SCE-L 5.7%
CMSC 5.7%
SCE-G 5.6%
CMSD 5.6%
SREA 5.6%
CMSA 5.5%
DUK-A 5.5%
CTPPO 5.4%
NRUC 5.4%
ETI- 5.4%
DUKB 5.4%
NEE-N 5.3%
SOJC 5.3%
DTW 5.2%
UEPCO 5.0%
You MUST double check everything about this before making any trading decision. There might be errors in my data, particularly with some of the older illiquids, we woulda called them “Grids” before he sold all of his.
I’ve got a GTC sell on my UEPEP – hope it goes
Yeah, it might trade a couple thousand shares a month. I have bought a few thousand this year already. I’m still looking for a little more volatility and more selling on conviction. People are slowly getting out of their BB’s and preferreds. When the unrealized gains and red start showing up in their accounts, is where I think some of the selling on the backs of selling has been. Buying illiquids and then when things start turning south and then wanting out is kind of a hard place to be in because the trade volume just isnt there.
I buy ones like these and treat them like oak trees. They have been paying for ~ 15 years, and they are still around when the wind blows. I really dont care what they drop to, unless the company is going bankrupt. This is because their divies continue to show up. If I was fine with the income X months/years ago, I’m fine with it today. Good luck.
Pacificorp, a major Oregon & Northern California utility owned by Berkshire Hathaway, has two non-callable preferreds. It has been sued in connection with several 2019-2020 California and Oregon wildfires. Any feeling for the company’s liability? Reserves? Any real risk of a bankruptcy filing?
EIX had more significant fires and still raised their dividend. But, things are still in the guesstimate stage. This from PacifiCorp most recent 10Q.
As of September 30, 2021, PacifiCorp has accrued $136 million as its best estimate of the potential losses net of expected insurance recoveries associated with the 2020 Wildfires that are considered probable of being incurred. These accruals include estimated losses for fire suppression costs, property damage, personal injury damages and loss of life damages. It is reasonably possible that PacifiCorp will incur additional losses beyond the amounts accrued; however, PacifiCorp is currently unable to estimate the range of possible additional losses that could be incurred due to the number of properties and parties involved and the lack of specific claims for all potential claimants. To the extent losses beyond the amounts accrued are incurred, additional insurance coverage is expected to be available to cover at least a portion of the losses.
Today, I had a long standing order filled—bought 200 BACRP at $107. It barely trades and today 1090 shares hit the market and sold between $95 and my order at $107. The last trade a long time ago was for $169. It’s a 7% Bank of America perpetual with no call date. At $107, my yield is 6.54% for a BBB- rated security. I was at the gym when it filled. Got home and immediately entered an order at $95 but never filled. One never knows when some illiquid stock all of a sudden hits the market.
Ugh. I wish I could have snagged that. Nice!
Nice catch Randy! I got 100 of these at 105 last year and flipped for 169 shortly later. I saw your 107 bid. I figured it was dead…good job!
I snagged 400 shares in mid February. Seems like a great deal especially with the cumulative feature and $100 redemption option. It hasn’t traded a single share since then. My order probably executed because my limit price was $110 which was well over the bid (or is it the ask?).
I cant say anything is a good buy now, ha. But if someone just has to do something without exposure to perpetual or long dated, some liquidity came back out today in 5.875% term dated RMPL-. An ask at $25.26. Its past call but has an Oct. 2024 term date to it. I risked the quarter or whatever (its actually less counting accrual math, Im not going to do) real call risk there is, to buy 200 more at $25.25 today.
I have been sitting here watching preferred and BBs sink in price. Some I actually own sinking as well. Not really doing anything much in the way of buying or selling. I cannot decide if we are in a slight over reaction stage to the current news or it can get worse. I already positioned myself to be out of lower yielding IG a while back so I escaped the worst punishment we are seeing but even at current prices I still think we are not in true bargain territory yet.
Since I own some SEC approved dangerous holdings I am already conditioned to seeing my account value drop tremendously. So I do not have a feeling of panic seeing a preferred I bought at 25.40 sitting at 23.75.
Using your example above I have to wonder if we should be waiting for RMPL- below par!!! That might be a nice signal to start buying with fresh cash.
This fund of RiverNorth has morphed from its original purpose as a marketplace micro-lender hasn’t it?? That came with the name change from its original RiverNorth Marketplace Lending Corporation name, right? I remember looking into it originally and deciding to pass, but its current mandate is much broader so maybe its’ worth a second looksee… the 200% mandated coverage ratio for the preferred calculated under Section 18(h) of the 1940 Act is always a nice feature, but I always wonder whether or not I overestimate its true protection in worst case scenario.
Ya, Im definitely with you on trusting any of these entities and their math. Otherwise I would have bought more, ha. There are a few companies at the right price I could trust with a huge chunk of my cash. But this aint one. The coverage ratio helps me mentally, but the terms are the attraction here. One always risks the cart before the horse thing on buying these.
If rates go up a lot of those oddball trust preferred sitting above par become much more interesting due to them being impractical to call compared to the past. Something to think about I suppose. I already own a slug of most of them so I am not sure I want to add myself. MER-K as an example is solid IG paying 6.15% interest at the current price. If Bank of America wanted to call it one would think it would have been done already with the last two issues they did. If they go below 26 that is some bargain territory there with a somewhat bearable call risk.
Can anyone confirm that AILLL (6.625%, liq pref $25) was in fact called last March?
Called 3/29/21
Grid or anyone else:
What’s the deal with AILLI (5.16%, $100 liq pref) vs. the rest of the Ameren issues?
Current yield on the other issues ranges from 4.1% to 4.79%. Then AILLI jumps 30bps higher to 5.06%.
Do you think this is just reflecting call risk (with AILLI coupon 26 bps higher than next-highest AILLN), or is there something else at play?
Bur, its all about the issuance yield in relation to par and call price. Plus, being illiquid, specific willingness to sell or buy an issue. Concerning AILLI nobody is really looking to buy, and nobody is eagerly looking to sell at this moment.
I personally wouldnt pay $106 ask for AILLI now, or $103 for that matter.
Some of the illiquids including AEE ones are starting a small sagging in price. I personally have no interest presently in these at current price points.
AILLL has been redeemed last year.
Grid already knows this. Meant more as discussion.
If the more liquid preferred keep dropping and create sales it is the ills holding up that should be sold. The time to buy ills is past unless they drop like a rock. If I can step out of an ill paying 4.5 to 4.9 for the same good price I bought it at tomorrow to capture a liquid high quality preferred paying 5.5 to 6 you bet I will take that layup. We are just not there yet. No guarantee all ills will hold up when it happens but all I need is 1 or 2 of them to hold up due to some bidder to make the swap.
Anyone have a view on what is going on with FGFPP, a preferred stock issued by FG Financial group that dabbles in SPAC. The preferred has been cratering the past three weeks. Down to $19.
Anyone seen any news on AILLN? I had a little GTC order just filled at $102.
No Ameren filings on AILLN. Its coupon is two basis points less than AILLM (4.9 vs 4.92%), and the ask on AILLM is 112 (AILLN if called redeems at 102, while AILLM redeems at 103.5). I picked up AILLN as well at 102. Zero principal risk, so the question is whether a buyer is happy with a 4.8% safe return (IG)? Interest rate risk is always present, but relative to the under 5% deals that have been prolific for several years, AILLN seems better (for now). Ameren, unlike some of the other ute illiquids, has called some issues. But AILLI at 5.16 has been hanging out there for decades. It could be called first, if at all, or the company could redeem them all–unlikely in a rising rate environment.
No news. That was me, Private. You didn’t buy them all, but you’ll get another chance Monday.
I’m sifting thru the cobwebs & dust in my sock drawer and selling some IG illiquids I thought I’d hold forever.
Forever seems to be now. 😉
CNLPL hits $67 today (I believe an all time high)
Not sure why but someone wanted this so bad but I was happy to accommodate them on the way up. Alas I missed selling at the high of the day but I sold all 300 of my shares that I have owned since 2018
Sad to see them go but just could not resist. Now I have to figure out what to do with the proceeds
Goodbye old friend.
Mav, the patience of Job paid off for you. Congrats!
Thanks Grid. Maybe with some rate hikes I can get lucky and buy them back in the mid 50’s later this year
It might happen, Mav. I remember having angst buying it at $53 five years or so go, ha.
Dang, a had a good until cascall order out and they went for 62 today. Bought at under 53 some years ago. It’s sister issue CNTHP is around 60.
Meh, Dont hang your head, RE. If I judged every trade on its merit for getting out at the top, I would be a failure. Yet every gain stacks the returns as a compliment to the divis received. All you need is a suitable substitiute in case you cant get back in.
Right now I have been feverishly trading a couple thousand shares of C-every day that I can banging out 20 cent gains. Trying to get the cost basis down to $25 as quickly as possible while its gyrating in a trading range after exD. This is one of the safest best live floaters on the market credit wise. But I wouldnt want to buy and hold at $27 knowing its gravely past call into a rate hike environment. If it shoots over $27, I will have to let em go.
GB, C?
Oops…C-N… missed the N
Gridbird, why do you think the 3 series of Citi TruPS haven’t been called? They look pretty attractive with the live float, but hard to believe Citi will leave them be when rates start to rise
Their CEO was catching hell over it a couple years ago and he was staying firm they had no intentions of calling and liked the flexibility of it. But I dont trust it either, thus I have used the volitility in the issue since exD and traded it pretty hard the past week or so. Counting the interest payment I got buying pre exD and trading, I have got my cost basis just under $26 already. It has a lot of liquidity and has moved around 20 cents up and down in a single day several times. So I dont trust it, that is why Im getting what I can now when I can.
But…if the damn thing ever dropped to par without a call, I would feast on this like a fat man at an all you can eat buffet. Until then I have to stay rational and pay mind to call risk.
The debt funded into the trust is 7.87% and it pays out 6.8% off par. So there is a limit to their patience to leave outstanding at some point, or even today for all I know.
Thanks. This is pretty bizarre. They could have easily called and reissued a similar security at much lower rate. But the market seems to believe they aren’t gonna call as C-N has traded above $28.50.
Its not as bad at first blush indicates. State and Fed tax appears to be about 30% and the interest can be written off as a deduction. That is equivalent to a net 4.76% QDI preferred as preferreds are not tax deductible. Still…….
Grid – You’re talking about Citibank being able to write off the interest, right? so from C’s point of view it’s not such a cut and dried decision as it might appear to have these called?
Yes, precisely. Those trust preferreds were created as a work around to in essence issue a preferred that met Tier 1 guidelines but allowed bank to keep the tax deduction. But even with that benefit most that were issued by various banks and are long gone and cannot be used again.
So the interest deduction alone wasnt a deciding factor in all being redeemed over the years. Also one never knows what their capital allocation plans are and how they want their capital ratios funded, etc. so there is no guarantee of it staying around tomorrow, just because its around today.
CBKPP has a seller out at $102.65, 900 shares left, 200 sold. It has 3 more divis of $1.56 before either being redeemed or going floating at 3 month Libor plus a rather generous 4.556% spread for a BBB+ HQ issue. If Fed follows through on hikes this one could get back over 6% next year. This is the sister to CBKLP that was past call for several years before being recently redeemed.
This was a close call for me, but I decided to buy 100. And probably jettison a lower yielding HQ perpetual to balance out the purchase.
CoBank is annually considered one of the 50 safest banks in the world. Its a co-op rural focused bank if interested.
https://www.cobank.com/web/cobank/corporate/farm-credit
A bid of $101.50 for 800 sits in line, so one may be able to bird dog lower if they were interested in pursing this security.
What broker allowed you to buy this?…Neither Schwab, Vanguard, or Fidelity would allow me. Thanks!
Sman, TD allowed me to buy. It might not be available on some brokerages. I have Vanguard and they wont as you know. They forced me to sell sister issue CBKLP a few years ago when I accidently snuck it through them somehow.
Ally has allowed it in the past.
I see some heavy hitter is out lurking with a 5,000 share bid at $102.25. Thats above my pay grade!
Ally does not allow it. Pink with limited issue. Closing only. I was going to try to snag 200 with a bid. Oh well. I thought about calling them but it is right on the line for me. Not worth the argument over pink w/limited. Great issue though as you said.
As always I appreciate the tip.
Fc, Ally must be tightening up the leashes. They used to sell dog turds if they had a ticker slapped on it. Times change.. I have basically pulled out most of my cash and about to close that account down. Its just one less thing to keep track of for me. Im just going to 2 accounts and should just go to one. Opened that damn Treasury Direct account again for Ibonds so I never can get things consolidated enough for me.
Weren’t both CoBank issues originally issues as 144A and somehow leaked into the public domain? That’s probably why they’re now not allowed in some brokerages now, don’t you thing???? Yup, times change…….
Thats definitely probably the genesis of the problem. It was definitely issued institutionally. And still basically resides there. A $400 million float that rarely trades. CoBank for some reason sends financials to OTC so it stays tradeable. AG Bank wouldnt comply, so AGRIP wont trade anywhere retail wise now I suspect.
Well that just confirms my suspicions, Grid – I’m not alone in an inability to get a grip on things as they are these days…………… ha
AgriBank (AGRIP) is the safest in US according to the Global Finance 2021 list:
https://www.gfmag.com/magazine/november-2021/worlds-safest-banks-2021
Best regards, No. 12 (or whatever)
Forever Favre, Looks like things dont change much. Here is the 2021 list.
https://d2tyltutevw8th.cloudfront.net/media/document/press-release-worlds-safest-banks-2021-global-1631651653.pdf
Agri is leader at 35 and CoBank is 44.. Only 4 US Banks on list and they are Ag and Coop related. But dont try to buy the Agri Bank preferred, it is too dangerous says the SEC. But buy all the Bank America preferreds you want even though they are never make the safest banks in world list.
2WR, I guess we got a little proof today that CBKPP is more of an institutional issue. It has had one transaction today. A 10,000 share block moved at $102.90 today. Unless that was you shedding a tear before you hit that buy button for $1,029,000 on a single stock purchase. 😀
Grid – Considered as an individual family unit, we only allot that kind of money for purchases on QVC…. Those 3 oz Yankee Trader Scallop cakes have become very expensive, but then again we can’t just walk into the local Piggly Wiggly and pick em up and to the best of my knowledge Doordash and the like is nowhere to be found around here.. ha