Incredible Lack of Liquidity in CEF Preferreds

If you didn’t know better you would think that all of the CEF preferreds where on a trading halt.

Obviously everyone holding them is plenty happy to just hold on as volume heading toward mid-day are a tiny fraction of the normal volumes (at least per Google Finance which is sometimes lacking in accuracy).

Here is the list right now of the Gabelli issues (not including Ellsworth and Bancroft which are also Gabelli issues).

The 3rd column from the right shows the percentage of average daily volume.

Just as I look at this I note GRX-B has taken a 85 cent fall with a bit more volume–but it is now callable.

The entire list of volumes on preferreds is here.

28 thoughts on “Incredible Lack of Liquidity in CEF Preferreds”

  1. Today was a clear indication of liquidty problems throughout all assets. Bonds went down along with stocks. Even the safe very short term bond funds (MINT, GSY) went down. Clearly, people / funds were selling whatever was liquid enough to get a bid. This is a market in distress, particularly corporate credit (Both investment grade and HY). Absent robust fiscal and monetary interventions we are in for still more pain. Over the past 10 days I let go of most of my bond funds that hold corporate credit. There is a lot of trouble in that area.
    It’s 10 pm and futures are clearly not impressed with what the president had to say in his speech from the oval office. DOW futures now down 900 setting us up for what looks like another ugly day tomorrow.

  2. Anything and anybody highly leveraged is potentially in big trouble right now and so are their bag holders. Some 1 yr B- rated MMLP senior bonds sold today to yield 40% lol. I did a small buy DCP (Phillips 66 & Enbridge) senior 2yr BB+ rated (for now) to yield 7.6% this had 2.5% yield last month. Obviously most concerns remain largely centered in energy leverage…..for now. Any other similar leveraged sectors are equally vulnerable. That’s only what I think though and I don’t know much.

  3. For whatever it’s worth, I own a number of corporate bonds, Verizon for one, which had been moving up recently as treasury rates plummeted. Then this morning however, a couple issues where down around 4% (yikes). I also noticed that there wasn’t much interest on the buy side, curious and concerning.

  4. Once again huge losses today for MLPs, shipping, transportation, infrastructure, even MReits with good reputation issued by NRZ or AGNC. Not just general panic mode but something specific to preferred and debt.

    1. Gabriele, Dont forget the hospitality preferreds also… This market sell off is definitely a bifurcated one in preferred land. Most of mine that are newer issues utilities are still above their IPO price though well off their crazy peaks. The ones you mentioned largely have been pummeled. The Dec. 2018 sell off has been different so far. Everything dropped hard (that was liquid) and roughly equally but not as deep as the offenders this time. Take IPLDP I own. It is still around par, but Dec. 2018 it cratered to $22 before rebounding. Quality issues have held up fairly well. My biggest beat down in EP-C. It was actually up a tiny bit today. I was amazed as I golfed today and wasnt really paying attention.

  5. Just bought 3,000 shares of “WFC+Q” at $25.13 which I consider a true steal. Its a 5.85% coupon and not callable until 9/15/23. I could certainly be wrong but it seems the market is filled with some pretty good deals today. It would be hard for me to fathom WFC going bellyup. Old WB owns a super boatload of the common.

    1. Thanks for the heads-up Chuck. Might want to take a look at AIG-A. Same ballpark of yield and roughly same quality with IG ratings. After getting in on the IPO, I never thought I’d see this thing come back down to Earth the way it ran up. But here we are.

  6. Seeing some crazy wide spreads between bid / ask today on some issues.

  7. On just a slightly different note as I sit here listening to CNBC and all the guests seem to be in what I call “TOTAL PANIC MODE”. Iam going to take a guess that many of you (including me too) own alot of preferreds that are NON-CUMULATIVE. So I’m sitting here thinking this virus is way more serious than they are telling us. So Iam starting to wonder just how many of these companies that we all own end up not paying their coupons and since many of them are like I say non-cumulative they don’t have to ever pay them. Just wondering???…………………… On paper I’m down $148,000 today.

    1. IHIT is trading at $10.1, seems like a very good deal. Bought 1300 shares. Of course due diligence is warranted.

        1. That’s about where it was last March, Trades mostly between 9.7 and 10.7

    2. Chuck, sorry for your loss. I have been hit hard with CORR-A its down 35%!
      Interest rates are practically zero so once this panic runs its course I expect everyone will be hunting for yield again.

    3. Chuck, I hadn’t thought much about the non-cumulative, but I think by the end of summer a lot of this will be behind us. I could be totally wrong, wouldn’t be the first time, but if we’re in quality, I think we’re ok. I didn’t buy anything today, but would like to pick up small amounts of the AGNC and NLY perferreds tomorrow.

    4. Chuck, I am no bank expert, but Mohammed El Erian who is a pretty good analyst said this credit and liquidity problem rolling the market is not coming from the banking sector at all. They are all well capitalized he said. Its coming from the shadow banking sector.

  8. Provided by Business Wire
    Mar 9, 2020 5:00 PM EDT

    Gabelli Healthcare & WellnessRX Trust to Redeem Its Outstanding 5.76% Series A Cumulative Preferred Shares

    The Board of Trustees of The Gabelli Healthcare & WellnessRX Trust (NYSE:GRX) (the “Fund”) authorized the redemption of all outstanding 5.76% Series A Cumulative Preferred Shares (the “Series A Preferred”). The shares will be redeemed at $25.0520 per Series A Preferred (the “Redemption Price”), which consists of $25.00 per Series A Preferred (the liquidation preference) plus accumulated and unpaid dividends and distributions to the redemption date of April 9, 2020 (the “Redemption Date”).

    As of the Redemption Date, the Series A Preferred will no longer be deemed outstanding, dividends will cease to accumulate and all the rights of the Series A Preferred shareholders with respect to the Series A Preferred will cease, except the right to receive the Redemption Price.

    1. Thanks A4I–I missed that one. Will get it off the list. No giant surprise here.

      1. I was just pointing out they were not on your list of Gabelli’s…..Was that because they’re puttable, or were puttable in the case of GLU-A? no need to respond.

  9. Hi Tim, your work is opening so many eyes ..THANK YOU ! for all the info and advise that you and also others are sharing here..from the list above are you buying anything , and if yes what prices since the buyers are on strike.
    Thank you to all of you for be here!

    1. Thank you danny. No buys at these prices. I snagged some of the GGT-E 5.125% late last week (or was it Monday) for 24.99.

      I would be a buyer of anything with a little call protection (call date is a year or 3 out) down around $25–just the Gabelli type rated issues. I won some others but they are dicier and I am not looking to add at this point.

      1. Thank you Tim, and also Affinity4Investing for the help/info..Good job ..please keep up the good job!!

  10. We are seeing the same lack of liquidity on many individual corporate bonds. Buyers are on strike. . .

    1. Market is in a panic mode, not me. Watching Yahoo finance the bids and ask are not matching what is being reported as lows on the stock

      1. Charles, I noticed that. It is because of the huge spreads. I still have a lot of cash to deploy but the stuff i want to buy is not on sale yet.

Comments are closed.