Annuity provider Jackson Financial (JXN) has priced their new fixed-rate reset preferred issue.
The initial coupon will be 8% which will last until 3/29/2028 after which time the rate will be reset to the 5 year treasury plus a fixed spread of 3.728%. The issue will then be reset on each 5 year anniversary there after.
The issue is 1 notch below investment grade–Ba1 from Moody’s and BB+ from S&P. The dividends will be qualified.
The issue trade immediately on the OTC under ticker JXNFV.
The pricing term sheet can be found here.
Careful with small nibbles- brokerages like Schwab are charging $6.95 for it while an OTC stock. almost 28¢/sh on a 25 sh buy.
Low floating rate is a deal breaker for me since 8% is the bottom of the range. Maybe I’ll flip 100 just to stay in the game.
That is the problem with resets now is they have to have relatively low adjustments because the 5 year is so high now.
It was the inverse a few years ago.
Fidelity shows it at $24.92 but it is not trading yet.
JXNFV is trading. I pulled a Grid move and bought some while on vacation by the pool at Fidelity 10 minutes ago
Its a great location to trade isnt it, Mav. Beats where I am going in a few minutes. To the golf course and 42 degrees with a 10 mph NE wind. And yesterday we played in shorts in 75 degree temps.
It is indeed Grid. Been in the 80’s all last week and this one. Catching some spring training games later this week and next
Yeah, it started a few minutes after the bell. There doesn’t seem to be any upwards pressure on the price right now so it is not coming out of the chute hot, which is surprising. We will see how the day goes.
I bought a few shares as soon as it started trading.
Given Powell’s testimony rates will go higher than expected, I am waiting before purchasing. The spread needs to adjust IMO.
Gridbird or Maverick61…..
Can you tell me how you were able to purchase this? I have securities at Fidelity and they tell me its only trading in the grey markets and I couldn’t purchase shares.
. How do you get access to the grey markets?
Dan- I bought a couple hundred of these yesterday on Fidelity with no problems. Not sure what the problem is??
Dan, Like Fryman said it appears to be trading. Im not personally buying but I just put a low ball order through on TD. Are you using the temporary OTC ticker? If your brokerage is balking online, you may have to call your income desk to place an order assuming they allow it.
Looks like it switched to JXNFL today, but brokerages slow to update it:
https://www.otcmarkets.com/stock/JXNFL/quote
Dan, no trick or need to do something special. I bought it the very first hour it was trading at Fidelity just like any other stock
Try the new ticker JXNFL at Fidelity today, I see it has updated in my account
Lincoln paid what 9.5 and its trading at 28.35. Lnc and jnx are similar market cap. And VA biz model. We had a couple other recent issued 8’s that are trading well. Id think low 26 a nature spot shortly out of gate.
Verified: Moody’s rates it Ba1.
Here is some color on the reason for the negative outlook. Excerpted from the full report (see the link below):
“The negative outlook on Jackson reflects the challenges the company faces in building capital, lowering proforma leverage and diversifying an inforce block of liabilities concentrated in variable annuities (VA). A higher level of regulatory and economic capital is needed to offset the potential volatility in earnings and capital due to the high concentration in VA, as well as the economic exposure to interest rate risk.”
https://www.moodys.com/research/view–PR_1000007515?emailToken=eyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9.eyJVc2VySWQiOiJkYzVkYjczMC01NTBiLTQ3ZjctYjhjZi05NzY2ZjAxZmU0MzMiLCJEb2NJZCI6IlBSXzEwMDAwMDc1MTUiLCJjcmVhdGlvbkRhdGUiOiIyMDIzLTAzLTA2VDE0OjIyOjQzLjc5NDkxNDgtMDU6MDAiLCJleHAiOjE2Nzg3MzE3NjMsIlVzZXJOYW1lIjoiY3BhbWlrZW1iYUB5YWhvby5jb20iLCJVc2VyVHlwZSI6IjIifQ.TKTuL7abfhF83hBHuLUGTgWILD-bJI1GObdpAYzsrSc&cid=GAR9PTU7VKT2671
Probably fine to survive being only one notch below investment grade but too expensive at par.
Edison (EIX) just issued an 8.25% Ba1 2053 fixed to reset last week and is trading $101 and change on bond desk. So that 8% range for low stack seems to be the going issuing rate for the moment.
Yes Edison is not trading well.
No, actually the above 8.25% issue offered last week is doing fine, above par.
https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1073541&symbol=EIX5549825
Has anyone looked at JXN’s bonds ? I hadn’t’ seen this before that several of their bonds were only 2yr issues. That’s a lot of raising capitol in a short time over and over.
101 for 8.25 may be over par but doesn’t sound good to me. Yes better then a discount. But you were right, I see SCE (H is it?) has moved way back moved from 18is to 23or so.
I could never figure out why EIX preferreds were so disrespected.
Grid, why do you think this new holdco sub note priced so wide of the SCE preferreds, which I think are only rated 1 notch higher?
730, EIX/SCE preferreds (including the sub note) are all over the map as the terms and issuance yield/prices are all different. For example there is an SCE true preferred ($1000 issue) that is at 9% while SCE-L is well under par and a present 6.08% yield. The 9% one is a live floater past call now though. All EIX issues are subordinate to anything SCE issued.
When this was issued last week their “Suits” were championing it saving rate payers because it was tax deductible. Nice spin, lol….
This new issue was oversubscribed and has only traded less than a week and its last trade was $102.50 ish it looks like. A bit volatile since the shares may still be being tossed out to market.
My thing my eyeball has noticed to me without any proof, is there seems to be a bit of a disconnect between old issues and new issue yield. New IPO’s seem to be having higher yields than old issues on the market.
I didnt buy any, but I really am not buying anything on the market for the moment anyways.
Thanks. Doesn’t really make sense to me that the SCE exchange traded trust preferreds are all around 6% and this new holdco sub note is over 8% when Moody’s only has the sub 1 notch higher:
https://www.moodys.com/research/Moodys-assigns-a-Baa3-rating-to-Edisons-junior-subordinated-bonds–PR_474279