Little of This and That – Of Interest (Maybe)

Public Storage (PSA) sold a decent sized note issue today–$500 million with maturity in 2026 with a coupon of .875%. Pricing term sheet is here.

I wonder if PSA is going to start taking on more debt and move away from preferred stock financing? The ‘use of proceeds’ in the prospectus indicates that proceeds may be used to call preferred stock–next issue not redeemable until 5/17/2021 and then 8/1/2021 (the 5.40% PSA-B issue is already called for 1/20/2021). The company is under pressure from Elliott International and has recently “refreshed” the board of directors (their words).

The new ‘term preferred’ issue from Gladstone Land (LAND) is trading OTC under ticker LANPP–with a coupon of 5% I was not expecting much in terms or share price increase, but the issue took a jump today to close at $25.25. I may own a little of this–haven’t checked the limit order (small order) I had in yet.

The new investment grade perpetual preferred issue from Brookfield Infrastructure Partners (BIP) is trading under BIPFF and closed today at $24.87. With a coupon of 5% and being perpetual there may not be much juice in this one to move higher.

j mentioned today that Citigroup (C) has called for redemption their $25 6.3% non cumulative preferred (C-S) and a partial redemption of the series R 6.125 fixed to floating (not publicly traded).

7 thoughts on “Little of This and That – Of Interest (Maybe)”

  1. Tim asks above, “I wonder if PSA is going to start taking on more debt and move away from preferred stock financing?” If they can raise capital at 875 bips, why bother with pfds at 4x the cost?!

    1. Isn’t this evidence that the ‘yield curve’ for corporate securities is much steeper than for gov’t securities. Yes, preferred and BB are not exactly in the same risk class but most of the difference between yields on five year BB’s and long term or infinite life preferred are due to the difference in maturity.

      My first reaction was that this rate is crazy but now I think it shows that there are investors that have to do something with their funds and are willing to take a loss of around 15% of the investment in foregone dividend income over five years to avoid being locked into a long term, fixed income investment. Inflation hawks?

  2. PSA…point 875?
    I’d rather buy silver coins and fondle them on occasion just for the Hope Factor.

    1. I have a bunch of those shiny silver eagles—got a giant gain on them–they are never to be sold unless I need them for a loaf of bread after a nuclear attack–the are fun to fondle.

  3. I web searched “Newtek baby bond” today and found this website. This is an awesome website — very helpful and informational.

    1. This is an incredible website that has provided me with so many income-investment ideas. The knowledge of many of the commenters on this site is just extraordinary.

      Tim – since you don’t charge for this site; are there any charities you prefer/favor that I can allocate my annual donation dollars towards?

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