Monday Morning Kickoff

The Standard and Poor’s 500 fell by about 3/4% last week–closing the week at 3913 which was about 30 points lower than the previous week. This close is just below the all time high–let’s face it equities are at all time highs for all practical purposes.

The 10 year treasury closed the week at 1.73%–the highest close in over a year. In spite of uber dovish words from the Fed chair rates continued higher. Of course the Fed chair wants to see the inflation–not predictions–and even when he sees the actual numbers it will be ‘transitory’–no doubt. We all know Fed predictions (and most economist) are generally suspect–but this Fed chair apparently has a better crystal ball–whatever, we’ll just have to wait and see.

Just an additional note that yields on the very short end of the curve were extremely close to 0% last week–making the yield curve steeper yet.

The Fed balance sheet continues ever higher growing by a very healthy $114 billion last week. Of course the Fed remains in the mode of $120 billion in purchases per month–$80 billion in treasuries and $40 billion in mortgage securities.

The average $25/share preferred and baby bond actually rose by 3 cents last week. Investment grade fell by 2 cents, bank preferreds by 1 cent, CEF preferreds fell by 11 cents, while mREIT preferreds rose by 18 cents. All in all a fine performance in spite of rising rates.

Last week was a fairly active week in new income issues with 5 new issues priced.

Merchants Bank (MBIN) sold a new issue of non-cumulative preferred stock with a coupon of 6.0%. The issue is trading under the OTC grey market ticker MRHBP and closed Friday at $25.38.

Giant master limited partnership Global Partners LP (GLP) sold a new fixed rate preferred. The issue carries an coupon of 9.5%. The issue is trading on the OTC grey market ticker of GLPRP and closed Friday at $25.18. This is a K-1 generating issue at tax time.

CEF Priority Income Fund (untraded) sold a new issue of term preferred shares with a fixed rate coupon of 6.25%. The issue is not trading and will likely trade on the NYSE under ticker PRIF-G Monday or Tuesday with no OTC grey market trading.

Fortress Transportation and Infrastructure LLC (FTAI) sold a new issue of cumulative preferred stock with an initial coupon of 8.25%. The issue is a fixed-rate reset issue and as such the coupon will reset starting 6/2026 and every 5 years thereafter. The issue is trading under OTC grey market ticker FTIIP and closed last Friday at $24.90. This issue will generate a K-1 at tax time.

Lastly Eagle Point Credit Company (ECC) sold an issue of $25 notes with a coupon of 6.75% and a maturity date in 2031. The issue is not yet trading.

2 thoughts on “Monday Morning Kickoff”

  1. Tim,
    My guess is we will see a lot more issues coming to market. Offerings seem to be in the 6% range, would like to see what a good IG bank would offer if they came with a issue to market right now.
    I think business’s are wanting to roll over debt and push the call date out even if with the underwriting costs make it a break even. Re-fi rates could of hit a bottom now and will start to move up, even if a temporary blip companies may not want to take chances so are going to rush these new offers to market.
    Fortress and GLP seem like a yield trap to me. Something for a quick flip hoping you don’t get burned.

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