MetLife to Sell Preferred Shares

Large insurer MetLife (NYSE:MET) is selling a new preferred issue with the typical perpetual preferred terms and conditions.

The shares will be fixed rate and will have an optional 5 year redemption being in 2023.

Shares will likely be rated investment grade by both Moodys and Standard and Poors.

MetLife has 1 other issue of $25 preferred outstanding (NYSE:MET-A) and it is a floating rate issue that trades with a minimum coupon of 4% which is trading strongly at around $25 in spite of the current 4% coupon.

The preliminary prospectus for the new issue can be found here.


13 thoughts on “MetLife to Sell Preferred Shares”

  1. there is absolutely no incentive to own anything MET, the common or pfd. If you want to see how to run an insurance company, look at LNC or AMP.. and their stocks, on fire post 08-09

    4% LT coupon is capital loss disaster waiting to happen.. It will be interesting to see what they have to pay on the new issue and what demand will be like. Probably get the usual pension fund interest..maybe..

    1. Actually those individual bonds do in fact have long maturities, I looked one up and it has a call date of 12/15/2046. Invesco has a reverse repurchase agreement to liquidate the bond at 2023, maybe the price is predetermined

      1. At any rate I think a 5 year duration security that yielding 6% that is IG has to be too good to be true.

      2. I noticed the same thing and had the same question which is why I shied away from it. Not that it is a bad investment, just that I didn’t understand it.

      3. Hi Jacob–good point. The repo’s are used for leverage–these are leveraged funds. The price at which time and price they will be repurchased are predetermined.

        But good point–I think that the 6% current yield will likely reduce at some point in the future, but thus far has NOT included return of capital like the Invesco 2024 fund has.

        This is good discussion–although it makes me a little less comfortable with the shares. There is an added ‘trust me’ factor — and I really don’t trust any fund manager – always skeptical.

        Thanks for bringing up these valid concerns.

  2. Thanks for the notice, Tim.

    Hey, I know we both own IHIT, but I wanted to ask you about 2 similar target funds, EFL and JHY. Both are performing either better or about the same as IHIT year to date. EFL has a lower yield, but performs better. Maybe that’s a result of the 2022 maturation date. Thoughts?

    1. Hi Grant – I will check into them. IHIT is fairly heavily investment grade which is why I like it, but I am sure there are others.

      1. Thanks, Tim. IHIT definitely has the better portfolio of IG rated debt. EFL only has about 5.9% IG items and JHY is even lower than that. Plus, EFL has exposure to debt in European countries and other areas – which could be a plus as far as diversification goes, or, a hindrance like what’s happening with Italy. Still, EFL has outperformed as of late.

        I’m not selling my IHIT, in fact, I’ve been adding.

        1. While IHIT has a termination date of 2023 it seems like most of their holdings have very long maturities (20-30yr).

          Considering that, I’m not sure if it really belongs in the medium duration portfolio.

    2. I hold some Nuveen JHY. I haven’t been real happy with it, but I might just have bought in at the wrong time and price. Keep in mind the target price on these is something like 9.86 IIRC.

      The Guggenheim stuff has done better for me BSJJ, BSJK etc… I have held some of those to maturity and they end up right on target or a little better. Somebody bought the Guggenheim funds out recently though so I have to revisit them. Your yield will be off the last year before maturity as each issue comes due and they roll the fund up. And they are a little pricey.

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