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.
Picked up some HWM- (Howmet Aerospace) today.
Hello All,
AILIH is trading at 6.2% yield approx if anyone is interested. I nibbled.
Not a recommendation though.
Thanks Yield. On the flip side, CNTHO is bid $45, or 5.9%. I’d hit sell if I had any.
Thank you maine. I sold my CNTHO and decided to roll it into CTA-B at 69.70 per share. That is a 6.456% yield. A lot better then the ill UTEs currently which I have plenty of. CTA-B not as much. I am always hesitant to trade things unless I can really get a bump up but greater than a half a percent is worth it.
fc, sold most of CTHO at least what the market was willing to buy.
Not illiquid, but busted convert WFC-L is down c $100 from recent Sept/Oct spike, yielding c 6.4 and trading near 1,170.
Some III’ers love to play in the illiquid preferreds/babys sandbox. Some elves passed along the most frequently requested buys from them. The list is all $25 face issues that are currently paying out, traded on <=75% of the days in the last three months and IPO’ed before September 2024. I originally included all face values, but it expanded the list too much. A reasonable assumption is that most issues that are NOT $25 face are illiquid. 232/669=65% issues traded on all days, meaning 35% did not. The <=75% list is 66/669=10%, so plenty to look for in the Christmas stocking. As expected, the expert and pink issues are prominently listed
CSV Format is: ticker, where/how traded, pref/baby, 2nd type, percent of days traded, median volume
TRPRF,PNK,Pref,,10.9%,200
LTSK,Expert,Baby,Baby,10.9%,1000
INVUP,Tradeable,Pref,,15.6%,602
LTSL,Expert,Baby,Baby,15.6%,500
LTSF,Expert,Baby,Baby,17.2%,319
LTSH,Expert,Baby,Baby,18.8%,500
KTBA,Expert,Baby,Trust,21.9%,586
CRLKP,Expert,Baby,Trust,28.1%,69
FRFXF,PNK,Pref,,29.7%,1000
SLFIF,PNK,Pref,,31.3%,106
SOCGM,Tradeable,Pref,,34.4%,100
SPE-C,Tradeable,Pref,Convert,35.9%,441
AFFT,Expert,Baby,Baby,39.1%,585
PCG-C,Tradeable,Pref,,42.2%,399
PCG-I,Tradeable,Pref,,43.8%,612
AFSIC,Expert,Pref,,45.3%,500
CNFRZ,Tradeable,Baby,Baby,45.3%,330
GJP,Tradeable,Baby,Trust,45.3%,620
AFSIA,Expert,Pref,,46.9%,700
LTSA,Expert,Pref,,46.9%,551
GPUS-D,Tradeable,Pref,,48.4%,1156
GJT,Tradeable,Baby,Trust,50%,500
AFSIB,Expert,Pref,,51.6%,1000
PCG-H,Tradeable,Pref,,51.6%,424
AFFS,Expert,Baby,Baby,51.6%,1159
CHRB,Expert,Baby,Baby,51.6%,1710
JBK,Tradeable,Baby,Trust,51.6%,751
GJR,Tradeable,Baby,Trust,53.1%,1002
HNNAZ,Tradeable,Baby,Baby,53.1%,981
PYT,Tradeable,Baby,Trust,53.1%,875
TFSA,Tradeable,Baby,Baby,53.1%,291
MDRRP,Tradeable,Baby,Term,54.7%,678
AFSIM,Expert,Pref,,56.3%,750
SOHOO,Tradeable,Pref,,56.3%,766
GJO,Tradeable,Baby,Trust,56.3%,1200
AFSIN,Expert,Pref,,57.8%,1500
BPOPO,PNK,Pref,,57.8%,1051
FLG-A,Tradeable,Pref,,57.8%,36707
PCG-E,Tradeable,Pref,,57.8%,585
OFSSH,Tradeable,Baby,Baby,57.8%,1008
PSBYP,Expert,Pref,,59.4%,1118
PCG-B,Tradeable,Pref,,60.9%,751
PCG-G,Tradeable,Pref,,60.9%,829
PSBZP,Expert,Pref,,60.9%,2000
HTFB,Tradeable,Baby,Baby,60.9%,497
EFC-D,Tradeable,Pref,,62.5%,520
GECCO,Tradeable,Baby,Baby,65.6%,602
AFSIP,Expert,Pref,,67.2%,1100
FRMEP,Tradeable,Pref,,67.2%,469
GGT-G,Tradeable,Pref,,67.2%,1160
OXSQG,Tradeable,Baby,Baby,67.2%,606
PRIF-F,Tradeable,Baby,Term,67.2%,755
LFT-A,Tradeable,Pref,,68.8%,754
SOCGP,Tradeable,Pref,,68.8%,298
GJS,Tradeable,Baby,Trust,68.8%,297
HMLPF,Expert,Pref,,70.3%,353
PSBXP,Expert,Pref,,71.9%,1263
RC-C,Tradeable,Pref,Convert,71.9%,845
BANFP,Tradeable,Baby,Term,71.9%,904
GEGGL,Tradeable,Baby,Baby,71.9%,1827
GECCI,Tradeable,Baby,Baby,73.4%,1007
IPB,Tradeable,Baby,Trust,73.4%,1111
PRIF-D,Tradeable,Baby,Term,73.4%,818
GGT-E,Tradeable,Pref,,75%,868
PRIF-H,Tradeable,Baby,Term,75%,807
SWKHL,Tradeable,Baby,Baby,75%,1069
Tex, I looked through the list and placed an order for an expert market BB and had it go through even though it’s the weekend. I was somewhat surprised it did. I may cancel as its outside my time horizon for risk.
Well didn’t cancel and now the dubious owner of some AFFT at 15.25 This after saying I’m trying to cut long term risk.
Well Tex, I haven’t been a very good boy this year but Santa decided I deserved something in my stocking. I got a couple partial fills on a GTC in my wife’s Roth today. Wish Santa had left more as the CKNQP is being called.
Just wanted to let people know who are holding SOCGM that yesterday the Calif. state utilities commission decided that in 2 years if goals are met for the reduced use of gas in southern Calif. that a permanent date will be set for closure of Aliso Canyon underground storage probably 5 to 7 yrs from now.
https://www.reuters.com/sustainability/climate-energy/california-sets-clear-path-close-aliso-canyon-gas-storage-facility-2024-12-20/
This preferred stock has been a steady earner for decades. Not crying wolf, just letting you know to expect as this gets closer to this happening that news stories showing up could affect the price of this stock.
CNLTN 32.25×32.75
I can only imagine the new alert level will be > 6.3% now days.
CNLTN at 32.75 is only 6.1%.
AILLM is trading 80×81.
CNLPL is trading below the 51.84 call price..
Thanks, r2s.
Got a few at 49.90
Snagged some CNLPL at an average cost of 50.76. Had I not had a gtc order fill at $51.06 and waited a bit I could have gotten a bucket full @ $49.90 since for a short time there were over 600 shares being dumped at this price. Can’t quite figure why anyone would dump this BBB+ utility at a 6.50% yield and $1.94 under call price. CNLPL should recover quickly since the current yield is well above the average in illiquid ute land.
Congrats to those who scored on CNLPL, felt lucky I was able to get 100 this morning at 51.25.
The CY of a single illiquid is not a very useful fact, but how about the average CY of a bunch of them? For all of the Ameren, Connecticut and Union illiquids, 30 total, the average CY is 6.03% today.
Raise your hand if you’d like an ETF.
The illiquid average CY was 6.06% at day’s end.
rocks.. good data, but not ETFs please!
Maine-
Not even if the etf is illiquid? LOL
Pacificorp tendered for PPWLO (6%) at $155 and PPWLM (7%) at $180. Offer ends January 24th. Substantial prices relative to yesterday’s closing. I had a good ’til cancelled order in at $145 for “M” believing it wouldn’t hit and the shares are gone. Nice profit but I hate leaving $ on the table. Both issues are thinly traded with small share amounts outstanding. Company is owned by a Berkshire Hathaway sub, and has been the focus of massive fire-related lawsuits. Small arbitrage opportunities remain.
I was never able to buy those 2 preferred over the years. My timing was always wrong and I did not feel like leaving a stronger GTC order sitting around. Congrats to those who were able to get in much closer to par over the last 12 months.
Glad to see what the deal is. TY for sharing.
Here are some add to details on the tender and their plans:
The Offeror and the Company seek to retire all of the Preferred Stock. If the
Offeror accepts for purchase at least 66?% of the outstanding shares of
Preferred Stock, as a single class, in the Offers, the Offeror would hold the
requisite voting power to approve an amendment to the Company’s Fourth Restated Articles of Incorporation granting the Company the right to redeem the. Preferred Shares. If the Offeror accepts for purchase at least the RedemptionPercentage, the Company plans to seek the approval of shareholders for the Redemption Amendment, which approval would be within the control of the
Offeror. Upon approval of the Redemption Amendment, the Company intends to redeem the remaining outstanding shares of Preferred Stock. The Company anticipates that the price paid upon redemption would be consistent with the
price of the Offers.
If the Offeror accepts for purchase at least a majority, but less than 66?% of
the outstanding shares of Preferred Stock, as a single class, in the Offers,
the Offeror would hold the requisite voting power to approve an amendment to
the Articles to conduct a reverse stock split of the outstanding shares of
Preferred Stock. If the Offeror accepts for purchase the Reverse Split
Percentage, the Company plans to seek the approval of shareholders for the
Reverse Split Amendment, which approval would be within the control of the
Offeror. Upon approval of the Reverse Split Amendment, the Company intends to
conduct a reverse stock split of the shares of Preferred Stock using a ratio
sufficient to result in each holder of shares of Preferred Stock, other than
the Offeror, receiving cash in lieu of fractional shares of Preferred Stock.
The Company anticipates that the price paid for fractional shares would be
consistent with the price of the Offers.
HL.PRB trading massively down. Got tiny bit at 51.5. That puts yield at 6.81% I think. Don’t know if HL had bad news???
I just used the loose change to add to my HL-B at 51.37. Appears to be a few shares right at that mark. Thanks!
I don’t know why I cannot edit my post here. Today is ex div date. 12/16. But it has fallen much more then what it pays from previous sales as of late. I am good with HL as long as metal prices stay high.
Hm.. after I posted this now I see the ability to edit both posts! Oh well!
YH, other than the age of the Hecla preferred, I don’t see the attraction. The financials, ratings, etc don’t appear to support investment. What am I missing?
LarryL, well deserved skepticism. I bought back into a small position for yield, age of the company, track record of dividend payments and they look to be reducing debt by diluting shares.
Miners are sketchy in general, IMO. Feast or famine. HLpB was near 52 week low so I posted the alert. Nothing I post is a recommendation and people should do their own research, heed Larry’s advice and note that even at $51.37 it is trading above liquidation. I will dump when interest rates drop or I find something I like more.
I think the question should be if you want a preferred stock with a qualified dividend that pays > 6.84% and is cumulative what exactly would you buy? Frankly you are in the land of odd balls. CHS preferred for example could be an equivalent purchase. Liberty Broadband is another. California Utilities like SCE preferred with the possible fire risks? How about ATLC preferred that is doing a balancing act with subprime borrowers?
My point is you do not get this yield without some risk. At least keeping an eye on precious metals is something I do anyway. HL has been paying this preferred successfully for ~20 years with a hiccup during the GFC which they caught up with very quickly. Before that it has paid since 1993.
Funnily enough.. i own everything I listed above in sane quantities. HL is just another way to juice the yield. Spread the risk around. Also as history has shown.. for some reason people are willing to over pay for this preferred. It has pretty good opportunities to get out at a higher price quite frequently.
Not like an amazing deal or anything but CTA-B seemed to offer a reasonable yield for the quality today. About 6.2% BBB. Another example of a preferred where I welcome a call one day down the road. Also makes good swap material if CTA-A and B ever diverge enough to make it worth it.
PREJF trading down 40 c at 16.09 one day before ex date 7.60+ Yield on a BBB
Going to Expert???????????????????????
Some investment vehicles are purely a reflection of treasury yields. I put the illiquid utility preferreds in this category. If you buy them with the expectation of cap gains, you are making a bet that yields will fall. To me, this seems like a hard way to bet on rates, plus good luck divining their direction.
I like a 6% forever, low-risk IG investment. The tricky question is how much is enough?
Just sold UEPEP at 73.91 about even on cost with dividends collected. Solid 6% Ute but could lose value if rates rise. Like I posted, I was surprised to see local Poppy bank offering a 6 month CD at 5% on a freeway billboard this past week.(also 4.49% on regular savings) Cash was up to 20% until my flip trade on SUM today
I’d keep the long term 6+% qualified divvy over a short term 5%. Hasn’t UEPEP been trading above 75 lately? Some people are now expecting rates to keep going back up.
Charles M, interesting how we have the same data and make different decisions. I have a bid on Schwab to buy UEPEP at 73.91 (add to my holdings on this preferred). I view it as a long time hold, with a solid 6% dividend. Given that it is part of my retirement dividend portfolio and I have no desire to sell, I can live with the price fluctuations.
Martin and Larry I ran the cash down in my wife’s IRA to about 15%. Over the last month and a half her account has been moving between 1/2 to 1% loss after hitting a high. Most of what I had been buying that I considered to be not high risk has not moved up in value or even went down. This UEPEP was one I had a unrealized loss on from when I bought it with a 5% YOC. back then I expected rates to fall, which they have somewhat. But the trend of rates going down seems to be stabilizing. Then after a run up in share prices of the preferred’s we hold due to the market rushing into them and bidding them up the value has been slowly drifting down again. I have been selling most of what I bought recently that have not shown any upward price movement in a market that has been hitting new highs. This concerns me. If they haven’t been moving up I can only speculate I bought near the top, these are not preferred others are buying to drive up the price and my yield on cost is too low or because I wasn’t buying at a good deal. What concerns me is this is telling me I have more downside risk than upside.
I have been selling most of what has been hanging around what I paid for them and I sold a few I had some large capital gains on for fear of them getting called. Those are continuing to have capital gains to my regret.
Why sell some of these? well I expect or hope for a drop in the market and I want cash to scoop up more bargains. The current income on my wife’s IRA covers her withdrawals and still adding about 40% more than she takes out. She still has 2-1/2 yrs before she has to start doing her RMD so hanging out with almost 1/4 of IRA in SPAXX at 4% I’m good with.
I have looked at the old PS Business Parks preferred stock as well, but just am not sure of the current financial situation of the company. When they were taken private, they did load up on debt (the old PSB had little to no debt) in order to finance the purchase. This is their last SEC filing before they stopped reporting and it shows the debt level at 12/31/2022. Note 5 states the $3.9 billion in debt is in Floating Rate Mortgages: Interest rate based on one-month SOFR plus an applicable margin ranging from 2.25% to 3.99% based on amended agreements post closing. The Company uses derivative financial instruments to limit the exposure to changes in interest rates on variable rate debt as further discussed in
Note 6 — Derivative Financial Instruments.
https://www.sec.gov/ix?doc=/Archives/edgar/data/0000866368/000086636823000007/pspprx-20221231.htm
Thanks kaptain, standard operating procedure with P.E. borrow money short term to buyout the target then refinance new debt with the company using their credit to pay off the money borrowed to buy the target company.
Think of a Spyder and the captive fly.
Charlies M – wish I had updated financials on the company to make an investment decision on the preferred stock. $3.9 billion with debt at rates of 6 to 8% do not play out well for the company – but I have no idea of the current financial situation of the company. Good luck to all investors.
Do they have any requirements to disclose upon request of shareholders? You are an owner of the company, no?
What kind of yield is it paying now and is it still paying you?
Have the PSBxP preferreds been discussed here in the last year? I know nothing about them.
Re: PSBXP, PSBYP, PSBZP
Per the CFO , no financial information will be made publicly available.
I guess it’s time to buy!
Ah yeah LT It’s Blackstone
I like them . links/Blackstone does tenders from time to time. They are one of the more liquid names on EM. A bid of $13.5 usually fills, PSBXP, of course.
The question I have on the PSB’s is “who is the present obligor?”
LT, I seem to remember BX merged a couple of their RE funds, may have been due to investors requesting redemptions in late 2022 and into 2023 BX had to limit monthly requests from panicked investors. They went through a period of selling assets during this time and had just recently returned to honoring 100% of redemption requests I think in April. They have also went back to raising new funds and acquiring new assets. Which of the multiple funds that BX has started holds and is responsible for PSB’s preferred debt who knows.
See the discussion Chuck P and Tim had under the New Issues from yesterday post by Tim.
See this on Wiki
https://en.wikipedia.org/wiki/Blackstone_Inc.
The nursing home REIT in the UK they spun off and did the standard leeching (excuse me lease back) and the Danish bonds they defaulted on are standard operating procedure for P.E.
Now saying that, look at the history of BX
https://seekingalpha.com/symbol/BX/news
This has already been the year of M & A for BX. may be a good time to go back to flipping names of companies on BX’s buyout list to make some change on flipping for .25 to .50 at a time.
Being in the business parks REIT business I think Maine might have a point for a small holding.
LT.. I don’t know, is my answer.
So PS is now called Links Parks, https://www.linkparks.com/, which was bought up by various Blackstone entities, including one of their drawdown funds. The assets are generally higher quality, some sub-tier office-ish but not a lot. If Blackstone would default on the prefs, I think that would take a long time.. time enough for them to liquidate all the good stuff. I see no sign of this happening.. but I can’t guarantee it. Honestly, the fact that Blackstone has done two tenders for the prefs is the largest “tell” for me. I think these would trade about $18.5, or 7%, if not on the EM. It should trade at a higher yield given the risk that Blackstone pilfers the good stuff and leaves the pref holders w the bag. Some folks hate Blackstone, but trust me.. there could be a lot worse sponsors.
And FWIW, I have been a buyer of the Brookfield Property prefs in the past, but that is a more complicated story.
https://www.otcmarkets.com/stock/PSBXP/security
Maine, Something I have considered for my somewhat higher risk bucket in a small amount.
Here’s a new response as of 11/24 from Links’ CFO. It doesn’t really explain anything.
“The preferreds have always been the obligation of the same legal entity: ps business parks. This means that the payor is unchanged, but the payor’s common shares are now owned by funds advised by blackstone as part of the privatization transaction.”
My wild guess is since they aren’t “dividending up” to a holding company they might as well stop paying. I think I’ll offer these at a small loss.
I mean, it’s great they are paying nearly a 10% return annually, but the CFO won’t even tell me which funds hold the common shares.
This is distinct from something like Partner RE preferred, where there’s a separate entity that dividends net earnings up to the parent .
I could definitely be misreading this, but unlike , for example MSEXP, where I waited until I was sure of the procedure before acquiring most of my shares,
this is too much of an unknown. I can loan a friend money at 9% on investment property and have him back it personally. I’m just comparing alternatives and I don’t need this headache. It’s one of the reasons I rarely have anything to do with merger arbitrage anymore: I just don’t need the risk
I think I’ll just worry about rates going up and bitcoin taking over for fiat currencies (these bitcoiners love to repeat the words “fiat currencies”). There’s a cnbc article this weekend that 300 of the 435 Congressmen (er Persons)
are now pro crypto.
My friend who invented a stablecoin (and is NOT a btc maximalist) sent me an X tweet about hedge funds are now buying BTC and selling the CME BTC future for a 14.5% per annum “guaranteed profit.” Only one problem with that:
OK, Maybe more than 1.
The CME futures are cash -settled , so you can’t deliver the crypto against them. There’s definitively the potential for a wide divergence. As someone who has used massive leverage, I can tell you that trade is not one I’d make .
I’ve seen stuff happen to mergers that had already closed , but where the stocks continue to trade for the remainder of the day to allow funds to unwind positions. It used to result in a massive buy imbalance in the acquirer and a massive sell imbalance in the target such that if you just engaged in a market-on-close order on both stocks you had a guaranteed profit from several cents to , literally $10 per share or more (That wass the Verisgn / Network Solutions merger that widened by $10 in the final few minutes of trading). Anyone with a large leveraged position would have likely been stopped out on a fully-closed deal.
BTW , I was told by another friend that the friend I mention above who invented the crypto made $63 mill selling it.
Sorry for my diversion, I’m both reminiscing and warning. The GFC proved how everything in the financial system is linked and the strongest is often only as strong as the weakest link. Even “sure deals” can be costly.
Why am I so risk averse in my first year on Medicare?
I’m actually scared that crypto has already infected the financial system beyond repair. I wonder what would happen to CME if BTC suddenly went to $1 . I doubt brokerage firm customers would fulfill their obligations.
I have a sharp memory of Leo Melamed having to call bankruptcy lawyers on the day after the 1987 crash, because $500 mill or more had not been settled by exchange members. I guess CME is TBTF like OCC now
Lt, thanks for sharing a bit of personal history. History is something I have always liked. I think you just pointed out the Elephant in the room that nobody else is acknowledging. Funny how history keeps trying to remind us it’s happened before and can happen again. Be glad to trade you some magic beans for that cow. Oh, BTY did you check out the emperor’s new clothes? Someone convinced him they were real.
lt
Beyond the truth in your basic thesis….
As an ex-banker to CME firms, fear not.
All CME trades are margined and marked-to-market every day by the clearing firms.
Anything related to crypto I would guess would have steep margins (like as much as 30%?)
If volatility rises, the clearing firms make super-margin calls (increases). Fail to make the margin call, your position is closed out.
(I was the banker they called at 7am to lend them the money within two hours to meet the super-margin calls)
Westie, your personal experience lends credence to your cautious positioning and serves as a reminder to me about current risks–thanks.
Wow Westie,
Impressed you said “yes.”
Fido rejects my attempts to buy — expert market.
David,
lt is a more advanced investor (maybe accredited). He has an account with Stifel. This allows him to do things we cannot. Naturally he truly does pay for these abilities. We would probably be shocked at the cost they get him for compared to a discount broker most of use. Every time I think about giving a broker like that a call I realize the costs of it most likely outweigh what I was willing to invest in such a security.
I’m paying 10-20 cts per share to buy expert market through Stifel.
It’s crazy high and I intend to call around but haven’t done so yet.
That’s actually a discounted rate based on pre-1986 full commission by 55%.
I need to really set up an account directly at a clearing firm and just call their order desk.
I just don’t see myself buying or selling very much
and anyone can buy
New Cobank preferred, Series M. Only available to “accredited investors”
Series H (CKNQP) likely will be called.
https://www.globenewswire.com/news-release/2024/11/21/2985308/0/en/CoBank-to-Offer-Series-M-Preferred-Stock.html
The proceeds from this issuance will be used for general corporate purposes, including to finance any future redemptions of CoBank’s outstanding series of preferred stock, including CoBank’s Fixed-to-Floating Rate Series H Non-Cumulative Perpetual Preferred Stock.
I wonder if the new issue will at some point trade publicly.
Based on the name for CKNQP on QOL, it was a 144A stock also:
CoBank ACB, 6.20% Fixed/Float Non-cumulative Preferred Stock Series H 144A
that is a hopeful sign
CKNQP 130,000 shares traded today
ken
In Time & Sales window, it shows two trades today.
11:31:24. 65,271 shs. $100.65
11:31:35. 65,271 shs. $100.875
Interesting, that the $100.875 price was above the $100.75 ask
That’s it so far.
CoBank redemption history
CBKLP 6.125% fixed, first call 7/1/18, called 1/1/22
CBKPP 6.25% F-F, first call 10/1/22, called 10/1/22
It’s almost certain CKNQP will be called on 1/1/25
Hope so I just bought 200 shares looked underpriced. 12% APY div if called, 8+% for now if not called.
Sold an odd lot of NSARP (75 shares ) Held for 6 months. Bought at 68.50 sold for 72,50 Story of my life, it settled at 73.94 so I left money on the table. Harvested $4.00 share in capital gains and 2 dividends.
I had tried to add to my amount but my GTC orders never hit so I decided to let it go. This was a solid 6.2% for my YOC now someone has it for a 5.75% yield on their cost.
I’m in shock. My junk order for CKNQP filled at 99.25. I’m expecting a call on Jan 1, but if not 3-month Libor + 3.744%. If the notice requirement is 30 days, we should hear something around Dec 1.
The ask for UEPEP and CNLHN is good for 6.2% or better.
I could easily have missed it somewhere else in the prospectus but, unusually, I see no provision for any pre-announcement for any call on CKNQP in the area of the prospectus where you’d normally see it. All it says is, “We must notify the FCA before we redeem any of the Series H Preferred Stock.” They are, however, only callable “on the first day of January, April, July or October (or the next succeeding Business Day if such date is not a Business Day), beginning on January 1, 2025.”
Thank you, 2wr.
It’s official – CKNQP to be called …
https://www.cobank.com/corporate/news/2024/cobank-issues-300-million-of-preferred-stock-nov
Darn, I have it in my wife’s Roth. Now I need to find a replacement.
r2s,
Here is CoBank’s official notice that they will replace 3mL with 3mSOFR (+ the .26161% tenor adj). CKNQP is Series H:
“As a result of the Permanent Cessation, references to 3-month LIBOR in (1) the Series H Preferred Stock will be replaced with 3-month CME Term SOFR and a spread of 0.26161% when the dividend rate is reset effective January 1, 2025 …”
https://www.cobank.com/documents/7714906/7715425/CoBank-LIBOR-Discontinuation-Notice-for-Series-H-and-Series-I-Preferred-Stock.pdf/381b0165-9d9e-d0d0-fb9a-7766c7a3d59d?t=1711720655570
mbg, what yield does this come to? So many SOFR’s your reference is to commercial.
Charles, not sure which yield you’re referring to.
If I had to take a stab at it. 3 month CME SOFR is trading at 95.76. At $25 per basis point, this comes to 3.83%. Then add .26161 + 3.744 = 7.8%
Thanks Mr C
Fido has the Roth dripping shares instead of taking the dividend. Which is fine since we don’t plan on touching the Roth.
Thanks, Mr. Conservative.
I calculate the first floating coupon as:
1. The 3 month CME SOFR on Sep 27 = 4.59335% *
2. The tenor adjustment = 0.26161%
3. The floating spread = 3.744%
4.59335% + 0.26161% + 3.744% = 8.599% coupon for the 1st floating div.
* Floating date = 1/1/25. Prior div (final fixed coupon div) = 10/1/24.
I estimate the Determination Date for the 3mSOFR to be 1-2 days before the prior dividend’s pay date, which was Monday, 10/1/24 … so the day before that was Friday, 9/27/24.
I think that’s incorrect, mbg…. 1/1/25 = the starting date for when it floats, so the rate is not calculable until 12/30/24, possibly 12/27. That’s the relevant date to determine what 3 month SOFR Term will be. The first floating rate payment will not occur until 4/1/25 if it’s not called.
Don’t forget it’s 3 month TERM SOFR, a different animal….. The official place to find it is https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html but for me cmegroup has made logging in such a hassle that it’s practically impossible to open….. If you watch Bloomberg television, it’s constantly posted all day long there in the changing column all the way to the right… Today it is 4.5138% .. Historical rate not including the most current day is posted at https://www.barchart.com/stocks/quotes/SOFERMM3.RT/interactive-chart
My observation on most LIBOR conversions to SOFR is to use the 3 Month Term SOFR.
Very possible, I am off base on this.
As of Tueday Nov. 19 … 3 Mo Term SOFR was at 4.520% then the .26bp add.
Mini sell-off in CKNQP
Ask at $100
If called 1/1/25, a nice YTC
Ex date ~12/16
Thank you Irish. I was able to get 100 shares a teeny bit below 31.5. Nice when that happens. I was thinking to buy a bit more but ask is already at 32.
CNTHP – reality has returned. A large seller showed up… 25,800 shares traded, VWAP $53.07, current bid back up to $53.53
One of the better yields in illiquid ute land — 6.19% at $53
This traded almost 1300 shares at $98 on 10/21
Very odd
Anybody know why it got a 50% haircut? IN October