We are gearing up (mentally) for an active week in the stock and bond markets. Almost without question the tariff situation globally and in particular with China is going to cause some pain and suffering in some commodity markets as well as potentially in the equity markets.
Looking at the futures tonight share prices are off in most all the markets of the world–although we all know that the futures aren’t worth much in terms of forecasting closing prices tomorrow.
Last week we had the 10 year treasury trade in a range of 2.89% to 3.01% closing around 2.92%. Of course the key items we had last week was the Trump summit with Kim Jung-un, the Fed Rate hike and a late week rush to safety as the U.S. announced tariffs on Chinese goods. Of course not reflected in trading last week was reaction to China’s retaliation which came over the weekend.
Stock markets were down a bit last week closing around 25,090 on the DJIA–a loss of 220 points on the week–totally meaningless. I have to admit that I thought it was much worse–I don’t pay too much attention to the equity markets unless they have a REAL move up or down (maybe at least 300-600 points in a day). All I remember was the talking heads on CNBC were saying this was the “worse week of the year”–what idiots–I really need to have different background noise in my office.
For this coming week we have just 3 Fed presidents speeches—just shut your yaps–no good comes of these folks spouting off. Then on Monday we have the Housing Market Index (builder confidence) and Tuesday Housing Starts are announced for May–both are expected to run hot–but that is the consensus so likely it won’t add to upward interest rate pressures. Wednesday Existing Home Sales for May are announced and on Thursday the FHFA Housing Pricing Index is announced. Also on Thursday the Leading Indicators is announced. We would be really surprised if any of these are meaningful to any interest rate or equity market. We won’t need fundamental economic news to make for some wild markets this week.
As we had noted on Friday the Fed Balance Sheet was up $2 billion in the lastest week and thus didn’t contribute to any upward pressure on interest rates.
We had 2 new issues announced last week. 1st RenaissanceRE (NYSE:RNR) sold a non cumulative 5.75% investment grade preferred. This issue is now trading on the OTC Grey market under ticker RNREF and is trading right around $25/share. Ohio banker Synovus Financial (NYSE:SNV) sold a non cumulative 6.3% fixed-to-floating preferred from which they will redeem their outstanding 7.875% (NYSE:SNV-C) fixed to floating rate preferreds.
Also the new 7.75% baby bond issue from Cowen (NASDAQ:COWNL) began to trade and is right around $25.05/share.
We ended last week with the average preferred stock trading at $25.12 which is up a few cents from the previous week. Additionally there are 168 issues trading at $25 or below–2 fewer than last week.
Likelihood of ECCA be on called 6/29?
Also, looking forward to your security rating system rational.
Thanks
Hi, I’m very long most of the ECC dated issues, including ECCA term cumulative preferred which I believe will be called. ECC just redeemed a 7% term preferred (ECCZ) and ECCA has a 7.75% coupon, so this one is toast. Wishing you profitable investing, Nomad
Richard, I did some further research and it looks like ECC must give 30 days redemption notice; I have not seen ECC file, so we may get some accrued interest:
Redemption Procedures. We will file a notice of our intention to redeem with the SEC so as to provide the 30 calendar day notice period contemplated by Rule 23c-2 under the 1940 Act, or such shorter notice period as may be permitted by the SEC or its staff.
If we determine to or are required to redeem, in whole or in part, shares of Series A Term Preferred Stock, we will deliver a notice of redemption, or a “Notice of Redemption,” by overnight delivery, by first class mail, postage prepaid or by electronic means to the holders of record of such shares of Series A Term Preferred Stock to be redeemed, or request the Redemption and Paying Agent, on our behalf, to promptly do so by overnight delivery, by first class mail or by electronic means. A Notice of Redemption will be provided not more than 45 calendar days prior to the date fixed for redemption in such Notice of Redemption, or the “Redemption Date.” If fewer than all of the outstanding shares of Series A Term Preferred Stock are to be redeemed pursuant to either the mandatory redemption provisions triggered by our failure to maintain the required asset coverage or the optional redemption provisions, the shares of Series A Term Preferred Stock to be redeemed will be selected either (1) pro rata among Series A Term Preferred Stock, (2) by lot or (3) in such other manner as our board of directors may determine to be fair and equitable. If fewer than all shares of Series A Term Preferred Stock held by any holder are to be redeemed, the Notice of Redemption mailed to such holder will also specify the number of shares of Series A Term Preferred Stock to be redeemed from such holder or the method of determining such number. We may provide in any Notice of Redemption relating to a redemption contemplated to be effected pursuant to the certificate of designation for the Series A Term Preferred Stock that such redemption is subject to one or more conditions precedent and that we will not be required to effect such redemption unless each such condition has been satisfied. No defect in any Notice of Redemption or delivery thereof will affect the validity of redemption proceedings except as required by applicable law.
If we give a Notice of Redemption, then at any time from and after the giving of such Notice of Redemption and prior to 12:00 noon, New York City time, on the Redemption Date (so long as any conditions precedent to such redemption have been met or waived by us), we will (i) deposit with the Redemption and Paying Agent Deposit Securities having an aggregate market value at the time of deposit not less than the redemption price of the shares of Series A Term Preferred Stock to be redeemed on the Redemption Date and (ii) give the Redemption and Paying Agent irrevocable instructions and authority to pay the applicable redemption price to the holders of shares of Series A Term Preferred Stock called for redemption on the Redemption Date. Notwithstanding the foregoing, if the Redemption Date is the Mandatory Redemption Date, then such deposit of Deposit Securities will be made no later than 15 calendar days prior to the Mandatory Redemption Date.
Upon the date of the deposit of Deposit Securities by us for purposes of redemption of shares of Series A Term Preferred Stock, all rights of the holders of Series A Term Preferred Stock so called for redemption shall cease and terminate except the right of the holders thereof to receive the applicable redemption price and such shares of Series A Term Preferred Stock will no longer be deemed outstanding for any purpose whatsoever (other than the transfer thereof prior to the applicable Redemption Date and other than the accumulation of dividends on such stock in accordance with the terms of the Series A Term Preferred Stock up to, but excluding, the applicable Redemption Date). We will be entitled to receive, promptly after the Redemption Date, any Deposit Securities in excess of the aggregate redemption price of shares of Series A Term Preferred Stock called for redemption on the Redemption Date. Any Deposit Securities so deposited that are unclaimed at the end of 90 calendar days from the Redemption Date will, to the extent permitted by law, be repaid to us, after which the holders of shares of Series A Term Preferred Stock so called for redemption shall look only to us for payment of the Redemption Price. We will be entitled to receive, from time to time after the Redemption Date, any interest on the Deposit Securities so deposited.
If any redemption for which a Notice of Redemption has been provided is not made by reason of the absence of our legally available funds in accordance with the certificate of designation and applicable law, such redemption shall be made as soon as practicable to the extent such funds become available. No default will be deemed to have occurred if we have failed to deposit in trust with the Redemption and Paying Agent the applicable redemption price with respect to any shares where (1) the Notice of Redemption relating to such redemption provided that such redemption was subject to one or more conditions precedent and (2) any such condition precedent has not been satisfied at the time or times and in the manner specified in such Notice of Redemption. Notwithstanding the fact that a Notice of Redemption has been provided with respect to any shares of Series A Term Preferred Stock, dividends may be declared and paid on such shares of Series A Term Preferred Stock in accordance with their terms if Deposit Securities for the payment of the redemption price of such shares of Series A Term Preferred Stock shall not have been deposited in trust with the Redemption and Paying Agent for that purpose.
We may, in our sole discretion and without a stockholder vote, modify the redemption procedures with respect to notification of redemption for the Series A Term Preferred Stock, provided that such modification does not materially and adversely affect the holders of Series A Term Preferred Stock or cause us to violate any applicable law, rule or regulation.
Nomad,
Good to have this information.
Great to have your insight and research.
Richard
Richard, we are all definitely here to help each other and I want to thank Tim greatly for this forum. Wishing you profitable investing, Nomad
Tim, thank you for your Monday morning commentary. (CEPPU) Crestwood Equity Partners LP, 9.25% Cumulative Preferred Unitstraded on a huge block trade one day last week and hasn’t traded since, should begin sometime shortly http://quantumonline.com/search.cfm
Wishing you profitable investing, Nomad
Thanks Nomad–I have printed your note out so I can remember to look at this one a bit.
Nomad – those preferreds can be bought now at $10 per share, but the bid is only at $9 per my account at TD. Moody’s rates the preferred shares B2.
Lou, I only see a massive block trade one day last week and no other trades, you? Wishing you profitable investing, Nomad
Nomad – I don’t see any trades this week, but TD now has a bid price of $9.50 and an ask of $10. However, no shares have traded so far today.
Lou, that’s me at $9.50 bid. The order got rejected twice (no clue as to why), but no trades yet. There have been 3 trades:
06/15 9.4924 2106948 shares OTO
06/08 9.4924 220000 shares OTO
06/08 9.4924 4382532 shares OTO
Nomad – Now moved to my Vanguard account and I have an order in for 100 shares at $10. The order was “dropped” first, but now appears to be “open.” However, the ask 100 shares at $10 and my order still won’t fill.
Lou, I see it 100,000 shares offered @ $9.80 and I have major company @$9.50 on the bid.
CEPPU has the darndest par price I have ever seen….$9.13….Now that is a very odd par price.
Kaptain, realize last trade went off at $9.80 and that is 7% over par purchase price. A $10 purchase is 9.5% over par purchase. Just making sure you are aware of this and the par price, as it is not $10……
Crestwood currently has 71.3 million preferred units outstanding (par value of $9.13 per unit) which pay a fixed-rate annual cash distribution of 9.25%, payable quarterly.
Grid, thanks for letting me know the par price. Today I was in a rush and thought it was a $10 preferred. The 100 shares at $9.80 today were mine and were the only shares traded. LOL, I’m not sure I have ever seen a $9.13 par value preferred in the past.
Well Kaptain, a 100 isnt going to wipe you out, lol.. I just wanted to post as it is out of character for you to buy much over par if memory serves….Now me, thats a different story, I have just bought a nice chunk of HE-U about 2 divis above par, past call. But half of that premium will be clawed back in an interest payment at end of the month.
Grid, I will still be able to buy lunch this week, even with my small purchase above par value. At least you will soon get about .41 cents back in a few days on your HE-U purchase!
Yes, normally I like to buy below par value, but I will make exceptions. Earlier this week I was picking up a few shares of GJH, although I clearly should have bought a month ago before the semi-annual interest payment.
GJH, huh? I have thought of that one before, also. But I already have CTV and KTBA in the telco sector. Im not the richest guy in the world so money is limited. So if I am going to keep my well deserved reputation as “Mr. Ute Preferred” I have to keep a big chunk in that sector, lol.
Also, INSW-A should start trading on Wed, according to IR, for those who may be interested.
Ward C
Thanks Ward C–that was the other one I was waiting on.
Tim, well I couldnt resist, back in NSS at 25.75after selling them over $26. Only bought back 400 this time since I already now have the A and C issue too.
Am waiting for the ex date the end of the month and then will be re-evaluating. Likely will be back in them assuming it drops down into the lower $25’s area.
I went ahead and bought 400 more at 25.69 and flipped out of my NS-A and C shares. Worked out well as I am back into original position of NSS. Bought back between the 2 block buys over 30 cents cheaper and sold both the preferreds over a quarter higher than I bought. So essentially will double bag a dividend with the trade. Just my experience, Tim, but usually “buying the dividend” seems to cheaper than trying to snag with the full exD subtracted from purchase price…So in my mind I bought the last block at $25.12 since it goes exD before end of the month.
Hi Tim, PBY is the symbol for the new Prospect Capital notes, which are now trading around $25.20 per share.
Hi Wedghead–been waiting on that one to trade. Thanks