Monday Morning Kickoff

The S&P500 traded in a range of 4218 to 4325 closing the week at 4228 which is a drop of about 1.2% from the previous Friday–in the big scheme of things not much of a move.

The 10 year treasury rose to close at 2.99% which was a rise of about 15 basis points over the previous weeks close. The market place has now turned their focus from inflationary fears to the Fed driving interest rates higher based on a doubling of quantitative tightening to begin in September. This is a bit scary–while the Fed may slow their pace of interest rate hikes based on a slightly softening economic picture, the doubling (to the $95 billion area) of the runoff and sales of the Fed balance sheet is likely to bring some unwanted results (higher interest rates and lower stock prices). It is likely we will see mortgage rates shoot higher yet with the Fed letting $35 billion/month of mortgage backed securities run off the balance sheet. We’ll see what this grand experiment brings us.

The Federal reserve balance sheet fell by $30 billion last week bringing the balance sheet to $8.85 trillion–of course even with the ramping up of reductions next month the odds that we see even $8 trillion before the Fed is forced to suspend because of weak economic conditions–or a recession of some magnitude.

Last week was a tough week for $25/share preferreds and baby bonds as the average issue fell by 30 cents. Of course there had been significant gains in the last few months so a bit of a set back is to be expected. Investment grade issues fell by about 50 cents, banking issues by 49 cents while mREIT preferreds rose 3 cents and CEF issues were off 6 cents.

Last week we had 3 new income issues priced.

mREIT Sachem Capital (SACH) sold a new $25 baby bond with a high coupon of 8%.

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Illinois banker Midland States Bancorp (MSBI) sold a new issue of fixed rate reset preferred with an initial coupon of 7.75%. The issue is trading on the OTC under ticker MSBSL and closed last Friday at $25.20.

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Keycorp (KEY) sold a new issue of fixed rate reset preferred stock with a decent initial coupon of 6.2% The issue is now trading OTC under temp ticker KEYHL and closed Friday at $25.21.

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4 thoughts on “Monday Morning Kickoff”

  1. There was also a new PNC $1000 Reset issue last week, 6.20% coupon. The prospectus refers to a “public offering price” but it doesn’t appear to be tradeable. Am I missing something here?

      1. Fidelity does show trades today on this one on their bond platform…. They’ve got the description screwed up as a perpetual with a maturity of 12/15/2049 (not your 3999 identifier, Grid)….. Most trades have been at a slight discount to par such as 99.85 with the occasional trade shown to retail guys who obviously still have brokers on commission at prices anywhere from 101 to 102 1/8.

    1. Might take a bit for it to show up on FINRA. Typically they trade on bond market. PNC is no stranger to $1000 preferreds. They already have six of them on the market. The “3999 maturity date” is the flag that shows you they are preferreds.
      https://finra-markets.morningstar.com/BondCenter/Results.jsp
      Link didnt take so I will try this..
      Issuer Name
      Symbol
      Callable
      Sub-Product Type
      Coupon
      Maturity
      Moody’s®
      S&P
      Price
      Yield

      PNC FINL SVCS GROUP INC
      PNC5255632
      Yes
      Corporate Bond
      3.400
      12/31/3999
      BBB-
      83.582

      PNC FINL SVCS GROUP INC
      PNC3925909
      Corporate Bond
      2.854
      11/09/2022
      A3
      A-
      99.648
      4.490

      PNC FINL SVCS GROUP INC
      PNC5402215
      Yes
      Corporate Bond
      6.000
      12/31/3999
      BBB-
      98.625

      PNC FINL SVCS GROUP INC
      PNC5423630
      Yes
      Corporate Bond
      4.626
      06/06/2033
      A3
      BBB+
      96.549

      PNC FINL SVCS GROUP INC
      PNC5463651
      Yes
      Corporate Bond
      6.200
      12/31/3999
      101.745

      PNC FINL SVCS GROUP INC
      PNC.KR
      Corporate Bond
      6.460
      12/31/3999
      BBB-
      99.540
      6.490

      PNC FINL SVCS GROUP INC
      PNC4119535
      Yes
      Corporate Bond
      3.900
      04/29/2024
      A3
      BBB+
      100.291
      3.710

      PNC FINL SVCS GROUP INC
      PNC4420925
      Yes
      Corporate Bond
      5.000
      12/31/3999
      BBB-
      92.125
      5.427

      PNC FINL SVCS GROUP INC
      PNC4135545
      Yes
      Corporate Bond
      4.850
      12/31/3999
      BBB-
      93.920
      5.163

      PNC FINL SVCS GROUP INC
      PNC4497661
      Yes
      Corporate Bond
      3.150
      05/19/2027
      A3
      A-
      96.794
      3.897

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