There are only 2 baby bonds maturing yet this year and both issues reach maturity in April.
Medallion Financial (MFIN) has a 9% note (MFINL) maturing on 4/15/2021. The issue is trading at $25.39 at this moment–it had just gone ex-dividend in late December. The issue will pay 1 more full interest payment of 53.6 cents/share on 4/15/2021.
REIT Ready Capital (RCP) has a 6.50% senior note (RCP) maturing on 4/30/2021. The issue is trading at $25.12 now after going ex-dividend earlier in January. There will be one more full interest payment of 40.63 cents/share paid on 4/30/2021.
I only note this because maybe there is a relatively safe 1.x% in the Ready Capital issue in the next 3 months to stash some excess cash.
I don’t believe that either issue will have any trouble being redeemed, although Medallion Financial is not a very strong finance company.
On the site we have the baby bond page on which you can ‘toggle’ by coupon, current yield, maturity dates or just alpha.
Ready Capital appears to have called RCP – redemption for Mar. 26:
https://marketchameleon.com/PressReleases/i/1152246/RCP/ready-capital-corporation-announces-redemption-of-its
Anyone know why ebayl drop so much？
Is it called?
Yes David – Called 3/1/2021
https://investors.ebayinc.com/investor-news/press-release-details/2021/eBay-Inc.-Announces-Redemption-of-Its-Outstanding-6.00-Senior-Notes-Due-2056/default.aspx
Thanks so much🙇♀️
Looking at Medallion’s last 10-Q, they are in deep trouble. This maturity is really going to sting, because their lenders have been cutting them off and taking huge haircuts. I would expect this to be trading below par because of the huge risk involved.
This might be the straw that breaks the camel’s back.
Doesnt appear that way here.
New York, NY – December 23, 2020 – Medallion Financial Corp. (Nasdaq: MFIN, “Medallion Financial” or the “Company”) announced today that it has completed a private placement of $33.6 million aggregate principal amount of fixed rate senior unsecured notes to certain institutional investors. The notes will mature on December 30, 2027 and bear a fixed interest rate of 7.50% per year, paid semi-annually. The notes received an investment grade rating of A minus by Egan-Jones.
“We are pleased to announce the closing of our private placement as our profitable commercial and consumer lending segments continue to prosper,” stated Alvin Murstein, Chairman and CEO of Medallion Financial. “The Company intends to use the proceeds of this offering for general corporate purposes, including the repayment of our existing public 9% senior notes maturing in April 2021.”
A- from Egan-Jones. Why this is like buying JPM!
But doesn’t Egan-Jones rate JPM AAAA???
I actually have seen a BBB+ from Egan before. That must be a company on life support, lol.
Just so new III readers are NOT confused, Justin’s comments are 100% correct. Medallion is a very weak company. Any company that has to pay 7.5% for senior unsecured 7 year notes in this market is JUNK rated. Egan Jones rating this A- is ABSURD!!!!!!!!!!! If Medallion was Moody A-, they would be paying ~ 1.25% to 1.5% for this note. That is all you need to know.
I do not know if MFINL will pay when it matures on 4/15/21 or not, but we would NOT own it in any account. Not worth the risk IMO.
Tex, yes, its not a company I would not chase nickels for. So my interest is nil. But my last dollar bet is the present 9% will be redeemed.
Their subsidiary bank preferred is interesting to me if it would drop again as a high yield QDI play. They went ahead and wrote off all Medallions worth as zero so anything recouped is a bonus now. And they just had record earnings previous quarter. But at $22.80 its a couple bucks too high for my entry point for the high risk loans they endeavour in.
A fool institutional money manager looking for yield and client’s money are soon parted…
“ I only note this because maybe there is a relatively safe 1.x% in the Ready Capital issue in the next 3 months to stash some excess cash.”
RCP is currently continuously callable. I wouldn’t assume they will wait until the last day to redeem it. They could call it on Monday (although they may be required to provide a 30 day notice).
LL–they could of course call it anytime, but no harm even if they do at 25.12. But I don’t think they are likely to call early–they have there hands full with the Anworth Mortgage acquisition and I am not sure they can get much cheaper money than 6.50%.
They wouldn’t necessarily call it to save money on a refi but simply to avoid the risk of waiting until the last minute to roll the debt. The people with debt due in March 2020 who didn’t roll it while they could in January 2020 were probably kicking themselves.
From the RCP prospectus:
We are required to give notice of such redemption not less than 30 days nor more than 60 days prior to the redemption date to each Holder’s address appearing in the securities register maintained by the trustee.
By my calculation, at 25.12, the YTM is ~4.6%, which is not bad for 3 month money these days. Also you don’t lose, even if call announcement is tomorrow.
After holding RCP for a while, I recently swapped into RCA after RCP went ex-dividend earlier in January.
However, I am not understanding the disparity of the pricing of RCA vs RCP/RCB both of which yield less than RCA and with both trading above par. Is this just the inefficiency of the retail preferred/BB market or is the fact that RCA is a “convertible” causing confusion or is there something that I’m missing? Given that RCA is not close to being in a situation of being converted in RC common shares, one would think that it would trade more on it’s 7% yield than its conversion feature. And yes, I know RCA went ex-dividend on Friday but that still does not explain the disparity of pricing between it and RCP/RCB.
Thoughts ?
tim – I know there’s been some open-ended discussions on RCA here in the past, open ended meaning no true consensus decided as to exactly what you’re getting into when you buy RCA due to the issue’s complexity, especially involving conversion… The language seems very obtuse imho however the obtuseness seems to center around what the OWNER can expect if they elect to convert or when they have that right …Bottom line on conversion is that RC can choose to pay in cash, shares or combo of both should RCA holder decide to convert and that’s part of the issue.
What is not 100% made clear from what I can see is what happens at maturity should no prior conversion or redemption occur… Given it’s a note, I believe it will pay off in cash should it remain outstanding until then, but with all the other complexities I’d love to see that spelled out somewhere and I don’t see it.
I’d also love to see other’s opinions on the risks involved regarding options open under either conversion by shareholder or redemption by RC . If I remember correctly, based on current prices of RC, conversion is not going to be an attractive option and basically speaking any redemption by the company must be done on a calculation providing RCA holder a value of $25 at time of redemption, be it in cash or shares… So the discounted value of RCA seems to be due to its complexity of structure and perhaps holders not wanting to be subject to having to potentially own RC shares as payment upon RC electing to redeem….
Anyone feel they truly understand this one??? I thought I did but now am not so sure. I’ve owned this one, not traded in and out, since Sept ’17 at 25.50
2WR,
“ What is not 100% made clear from what I can see is what happens at maturity should no prior conversion or redemption occur”
This seems pretty clear to me. They have to pay the principal or they are in default. From the prospectus:
Each of the following is an event of default with respect to the notes:
2) default in the payment of principal of any note (including the fundamental change purchase price or the redemption price) when due and payable on the maturity date, upon redemption, upon required repurchase upon declaration of acceleration or otherwise;
Prospectus also says “ notes will rank equal in right of payment to any of our existing and future unsecured and unsubordinated indebtedness”.
So I don’t see how RCA is different than any other unsecured debt of RC’s when it comes to payment of interest or principal. RCA seems like a pretty standard optional convertible note.
Thanks. LL – I had thought I read that language somewhere but manage to skip over it this time in my quick refresher scan…. So to me, all the complex math formulae in the prospectus as to what could happen upon conversion is essentially irrelevant because conversion only happens at the election of the holder, not RC and I, therefore control or can ignore the conversion factors because I wouldn’t even be thinking of converting at any time.. Even RC’s ability to voluntarily call seems to be limited by factors having to do with RC’s share price and at today’s price, that seems to almost make these non-callable now – plus the optional call is defined as for cash anyway. Even a “fundamental change” clause seems to actually be a PUT for holders, not a call option for RC and would be for cash if implemented. So maybe now at this stage of the game, a buy of RCA today is equivalent to the purchase of a non-callable RC senior note due 8/15/23 because all the other wrinkles have practically no way of coming into play? Is that an oversimplification?
Citadel W I seem to remember you had a different take on this when it was discussed prior…. Does your interpretation differ from this???
Hi!
Can someone point me to the earlier discussion of RCA. I’m thinking of buying some now.
If find III to be by far the best resource for the non-numerical, real-world information on income securities and their relatives. Thanks, everyone!
D.
David – There is a search box under the Twitter list. Type in RCA or anything else and you can read everything that has been said about.
2WR and Landlord, thanks for your comments.
2WR, your description does seem to match my understanding of the issue as well. Although it’s somewhat tough to cut through all the legalese in the prospectus.
Yes, I think the notion that RCA is a ‘busted’ convertible is incorrect and recent volatility events on Wall St. have only reinforced that position. Getting the common share price to trade at levels that trigger the RCA conversion covenants would be much easier to accomplish today than 6-8 months ago, and I would encourage investors not to disregard that risk. If a dinosaur like Gamestop can rise 1600% in one month, then anything is possible.
CW – Yours is a reasonable point in light of the new volatility possibilities on just about anything nowadays. In addition, I believe the breakeven price for RC conversion is 16.67 or only slightly under 50% up from present price, so considering RCA a truly busted convertible would probably not be a good description… With 2 years to go, conversion could enter the picture as a viable alternative… HOWEVER, that’s a risk that will always in the hands of the holder because it’ll always be his choice to convert, not the company’s… One will never be forced to convert. The risk, as you point out, is not in the conversion itself, but electing to convert in an extraordinarily volatile time that might prevent one from being able to liquidate the common received at your locked in price share price, if that’s what one would want to do… I suppose arbing upon converting could minimize that possibility, though. Then again, this is now not an RC specific risk as opposed to one essentially faced with any convertible… But certainly worth taking into consideration…. My point is that if the holder elects to do nothing, any option that ends up happening leaves him receiving cash only, be it in an early redemption or upon maturity.
Now I’m remembering why I abandoned this conversation with you months ago….we also disagree on whether RCA is an optional conversion if the price trigger is met. No need to rehash this further… if you’re satisfied with your interpretation of the covenants, so am I.
OK – Not trying to be argumentative – I was just hoping you’d be willing to document why you think that so we could compare notes, but I guess that won’t be forthcoming…. I’m hanging on this language for my interpretation: “We may not redeem the notes prior to August 15, 2021. We [MAY – emphasis added] redeem [FOR CASH – emphasis added] all or any portion of the notes, at our option, on or after August 15, 2021 if the last reported sale price of our common stock has been at least 120% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.” From cover page of original prospectus, https://www.sec.gov/Archives/edgar/data/1527590/000104746917005057/a2232938z424b5.htm