Investment Grade Preferreds and Baby Bonds Now Callable

Below is a link to a spreadsheet with all (or virtually all) $25/share issues that are investment grade that are now available for an optional redemption by the issuer.

This MAY BE a place to hunt for issues that are ‘on the bubble’ as far as a call goes–in theory, they should be somewhat pegged to $25 plus accrued interest or dividend.

Some you will look at and say “what the hell”–why is it trading at $27? Of course the answer is that someone–either the issuer or the investor is snoozing a bit.

Others you will look at and say for 1% call risk (1% potential loss if called) you will take a chance.

On the other hand you might say–why would I hold these low coupons when they will get totally slammed if interest rates move higher.

It all depends on your personal outlook for interest rates–will they go up or down?.

Disclosure– from this list we hold the Axis 5.50% preferred (AXS-D) and the WR Berkley 5.625% baby bond (WRB-B).

Here is the spreadsheet.

Note–it is possible I missed an issue that has already been called–just let me know in the comments and I will delete it.

Also we have removed the pure floaters from the list since they are not tied to $25 at this time and trade much below $25.

20 thoughts on “Investment Grade Preferreds and Baby Bonds Now Callable”

  1. Back to beating this red headed step child again…Its PPX time again (and again). All year I buy under $25.50 and wait until exD and pops over $26. If it gets down into 25.30s its round up the greenbacks from anywhere and triple down again. Its early in the cycle so it could ride another wave down again. Of course the game is predicated on no call.

  2. It would be nice to know which of these are cumulative and which are not – is it possible to include that in the spreadsheet as I am sure you track that in the master spreadsheet from which this derived. Most IG preferred are not cumulative, as they are issued by banks and insurance companies that can’t use them as Tier 1 capital unless they are non-cumulative, so in the last decade or so they have stopped issuing cumulative. Yes, the risk is low that cumulative and non-cumulative will matter in IG preferreds like it does in the higher yield space, but it is still nice to know. Some are weird, for example RNR-C is cumulative (it predates the capital rules mentioned previously), whereas RNR-E is not.

    1. Hi RJ–I have included it on the new master sheet–which will be launched about 3 weeks.

  3. Thanks Tim – really useful to me since the bulk of my portfolio is made up of issues from this list.

    I’m not sure if NTRSP should be on the list or not since it will be called on Jan 1.

  4. Looking down the list of what I own, you missed two of them – GJV, a third-party trust for News Corp; and TCBIL, Texas Capital Bancshares which is split-rated at Baa3/BB. Thanks for another very useful spreadsheet!

    1. Thanks Coaster–I added the MER-K and TCBIL issues–I don’t cover the third party issues as of yet.

        1. 12–list just has investment grade. I think the list would be much, much longer if I added less than investment grade–which I might do.

  5. Has anyone seen the article in today’s Financial Times saying academics are accusing Morningstar of allowing bond funds to self-report their holdings? Unbelievable! If I owned any bond funds, I’d be hitting the SELL button today.
    https://on.ft.com/2QaqLDA

  6. Those slightly above par have less downside. They won’t fall as much in a downturn because price is already suppressed by call risk. So they are actually safer if you can handle a little call risk. I use some of them for short term money because they trade in a narrow range.

    YTW is actually better than indicated because those numbers don’t include accumulated dividends.

  7. Tim – Thank you for the list!

    I think there’s a good chance that the stock market underperforms over the next decade (some are predicting 4% average) and interest rates stay fairly low. We have a consumer driven economy. We also have little to no wage growth. Rising interest rates would appear to be devastating to consumers. I believe a lot of steps will be taken to keep rates relatively low.

    I like having a mix of fixed and floating rates to have diversity but I’m more heavily weighted towards fixed. Just some thoughts and I could be completely wrong about all this.

    1. “We have a consumer driven economy. We also have little to no wage growth. Rising interest rates would appear to be devastating to consumers. I believe a lot of steps will be taken to keep rates relatively low.”

      Hey Tex…wage and salary growth in the United States has been above 5% for the entire year, well above the inflation rate…at the same time interest rates have been going down, as evidenced by the three mid-cycle rate cuts provided by the Federal Reserve. What is especially good for the American economy in 2019 is that most of the wage growth has occurred at the lower end of the scale, among people who traditionally don’t experience it.

  8. Thanks for your great website. Here’s two that can be added to the callable spreadsheet: TWO-D, 8/3/17 and TWO-E, 4/30/18.

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