Mid Day Rambling

In what has been on ongoing trend interest rates have ticked a bit higher today to 2.97% on the 10 year treasury while the DJIA tumbles–this isn’t the norm (historically), but what is normal about these markets? They have been manipulated so long that what used to be up is down and what was down is up. Of course with the Fed balance sheet runoff and global central banks continuing to do a little QE why should anything be normal now.

1 new issue which began trading yesterday is the new 6.6875% baby bond from Eagle Point Credit Company (NYSE:ECC). This issue (NYSE:ECCX) doesn’t mature until 2028. Because of this particular maturity date it does have some level of interest rate risk in it and right now as can be seen it is trading kind of weak. The coupon coupled with the 2028 maturity date seems to push the limits of what kind of terms conservative investors like me are willing to accept in a rising rate environment. We have no interest now, but that doesn’t mean that we won’t have in the future.

A quick look across preferreds and baby bonds doesn’t show more than the normal + or – 1% moves.

We do have a new investment we will be making in by the end of the week, but we want to write a complete article on it–let’s say it is ‘innovative’.

8 thoughts on “Mid Day Rambling”

  1. Looking at your hint. If it’s the issue I’m thinking of I’m a bit surprised. A preferred with no term date (first early call 2022) for call and trading well over par…of course I could be wrong and usually am, lol. Just a guess. Looking forward to your article

  2. I am also not a fan of BT. I also avoid anything that has a maturity of more than 5 years. Yesterday I purchased AIW. A 5-year term with a current yield of around 7% and a YTM of just under 8% since it is trading at under $24.
    I appreciate your commentary and I thought I would pass along a suggestion to you.

    1. Thanks for the suggestion, Lengol.

      With it being so far past first call, I’d expect it to be trading closer to par value but it’s surely selling for a discount.

      Instead of AIW, I’m trying to move into GAINO as it seems to be trading a bit more stable for my tastes.

    2. Hi Lengol–yes am familiar with that company–used to be a REIT but now they are a C corp. While I haven’t checked them in a while their financials were a bit soft. Being debt it is probably ok, but I would watch the quarterly earnings reports.

  3. Tim, IMHO this is the hypocrisy story of the day… “Mr. Reit” on SA who has been pushing KIM since when it was at least $26.60 from almost 2 years ago, and recomending it all the way down, wrote him a “victory lap” article because it has popped almost $2 off its 52 week low….So now its $14.80 and he showed what a great pick it was….Funny the market is wrong when it drops and he is a “long term investor” and doesnt care when its down bigly….But when it moves north a little he seeks a little praise and wants to acknowledge a short term gain…..Totally disregarding the huge losses still there from recommending all the way down the mountain.

    1. haha–yes I saw that early today. He has turned into quite the huckster–watching him evolve over the last 7-8 years has been quite interesting. You and I both know it is all about the $$$$–clicks and subscriptions–not sure what anyone except the most sheltered investor really learns there anymore.

  4. Because of the reasons you list, maybe eccb is a better choice (7.75% and matures 2026, trading now ~$26.25)?

    1. Hi Eithi–yes that is an option. The term preferreds pay monthly so that is good, but even that one is out into 2026 for mandatory redemption. Right now everything I own is 2021-2025 I think–and the shorter the better. But maybe I will get pushed out further soon–it is hard to tell.

      Good luck

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