Monday Morning Kickoff

Well we will almost undoubtibly have a wild week ahead in stock and bond markets–whether it is up OR down is the question–or maybe it will be both.

Last week the S&P500 ended the week with just under a 1% gain for the week after a wild ride with the week opening down 1% after being as low as down about 2%–a wild ride, but all things considered not a horrific week.

The 10 year treasury traded in a fairly wide range of 1.86% to 2.01% trading down to 1.86% on Thursday before blasting higher to 2.01% (closing at 1.98%) on Friday as equity markets shot higher and inflation numbers continued hot. Investors are now convinced the Fed will move forward with base rate increases in March after they momentarily started to believe that the Ukraine situation would put a ‘hold’ on increases.

The Fed balance sheet grew by $17 billion last week as it pushes ever closer to a cool $9 trillion.

Last week $25/share preferreds and baby bonds ended the week relatively flat–although through the course of the week shares moved around quite a bit.

The average share moved lower by 4 cents. Investment grades issues moved lower by 2 cents, bank preferreds were off 1 penny, mREIT issues fell by 8 cents–very close to a flat week.

Last week we had 1 new income issue as Priority Income Fund finally priced their new term preferred.

The issue priced with a coupon of 6.375% and is trading under OTC ticker PRIFP and closed on Friday at $24.59.

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6 thoughts on “Monday Morning Kickoff”

  1. A question for our group. I own all the STAR preferreds. If they merge with SAFE, would that create a change of control event and the preferreds callable? Thanks in advance.

    1. TimH – I own a bunch of these and continue to buy more. Looks very safe at this time. They are way past the call dates so are callable at any time. I did not find anything in the prospectus that would change the status as a result of a takeover/merger etc. Hopefully, they will leave them outstanding for few more divi payments.

      1. It seems the higher risk of call for STAR preferreds comes from the cash they’ll be swimming in once the Net Lease Assets Portfolio sale goes thru. When that closes, I think they’ll be paying down additional debt beyond what goes with the portfolio so they could be taking a hard look at the preferreds as well….. But as far as a merger with SAFE, STAR already owns the lion’s share of SAFE so if there was a true merger, who’s to say whether STAR or SAFE would be the survivor?

    2. I don’t see much downside other than call risk. As long as you don’t pay much over stripped par. I started buying STAR-D near par and selling a little higher. Easy money until the price takes off or tanks and doesn’t come back.

  2. Hi Tim,
    Could you please take a look at the biggest losers page under the Preferreds tab when you get a chance? When you sort by Losers, the sheet wrongly computes the loss as equal to 100% of the current market price, instead of the loss. Thank you.

    Robert

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