Monday Morning Kickoff

It was a lousy week last week if you held common stocks with the DJIA moving in a range of 25,252 to 25,877 before closing the week out at 25,450.

The 10 year treasury moved from an opening high last Monday of 2.75% to a weekly low of 2.61% before closing the week near the low of 2.613%.

The average preferred stock moved 5 cents higher on the week and there are now 194 issues trading at $25 or below–still a long way off from the previous 70ish issues trading at these levels.

The FED balance sheet showed a $5 billion dollar runoff for last week as quantitative tightening continues at a rather normal pace. The FED may be done with interest rate hikes for now, but obviously the runoff continues which in a small way creates similar conditions as interest rate hikes.

Last week we had 4 new income issues announced or priced.

Digital Realty Trust announced a new investment grade perpetual preferred with a fixed rate coupon of 5.85%. The issue is trading OTC Grey market under the ticker DLRPO and last changed hands at $24.72.

Arlington Asset Investment announced a F-t-F perpetual preferred with an initial coupon of 8.25% which floats starting in 2024 at 3 month Libor plus a spread of 5.664%. The issue is trading OTC Grey market and closed the week at $24.10 under the ticker AISVP. This is a pretty junky issue and should have been priced higher than 8.25%.

NextEra Energy announced a new baby bond with a coupon of 5.65%. The issue is not yet trading. This is nicely investment grade and we may take a small long term position in the issue.

Lastly giant insurer American International Group has sold a preferred issue with a fixed coupon of 5.85%. The issue is investment grade. The issue is trading on the OTC Grey market under the temporary ticker of AIGGZ and last traded at $25.10

25 thoughts on “Monday Morning Kickoff”

  1. I initiated a position in the NextEra Energy Capital Holdings, Inc 5.65% due 3/1/79 at $25.10 at Merrill Edge. Size was 1000 shares; it was a 40,000 share minimum limit Friday. I had to put this through with my broker as the NEETP is not listed online yet. I have another order in at $25 par. Anyone else buy this baby bond? Wishing you profitable investing, Nomad

    1. Schwab got me 200 shares at 25.10 on Friday. Who told you there was a 40K share minimum? Just curious.

      1. Larry, that was through Merrill Edge and they claimed the sizes were all institutional… Glad you got some as I believe it will pop once it lists NYSE.

    2. Doesn’t everyone feel that we are starting to get used to being happy with 5% now? If the tide turns, anything in 5% range will be slaughtered. I think if we are in cash, and you are holding long term to weather downturns, it is ok. I cant bring myself to buy something like this.

  2. I’ve been loading up on (KMPA) Kemper 7.375% debt instrument due 2/27/2054 was callable 2/27/2019. I have spoken to the company a few times this year and there is “no indication” of a call at this time according to my 2 contacts (this could change though). Kemper is a $5.15+ billion market cap diversified insurance company, stock is KMPR and trades near $80 per share, very profitable and stable. I highly suggest everyone that is interested do your own deep due diligence before investing.
    Smile, Nomad

      1. I jumped all over KMPA a couple weeks ago. Financials look good to me & happy to add it to the stable.

        1. what are the chances that this will be called? otherwise looks like a very attractive investment

    1. Ok, Nomad…Followed your reco for 500 at 25.27…Enough meat on the bone here for a play…Oh wait…What did you just get me into…You know all those *expert* commenters on SA say never buy above par…ha!

      1. Grid, I use to buy wine Bordeaux futures and always “overpay” for the most expensive winery futures. It was like having your pick of hot IPO’s when you already had a buyer 20-25% higher waiting in the wings. When I would discuss it with friends or even wine store owners they all “knew better” so I just stopped telling them about the great futures trades. SA has become a bit of a hole as I see it as a place where many of their “professional” writers are just manipulating…

        1. At least you could drink your mistakes Nomad! Yeah, I know wine futures don’t work that way, shame really.

          Tip of the hat to you for KMPA, got me some at the close price. Call risk is minimal at that price really.

          1. mikeo, I just got my yearly allocation of a 3 pack of Screaming Eagle (was 2016 this year). I waited 8 long years on their waiting list (I think this is my 7th or 8th year of receiving wine). Fine wine is like long term investing. You don’t even think about opening it up for at least a decade to get the “reward” and most people cannot wait that long. They want instant gratification and the wine is a “sock drawer” hold. Be Well, Nomad

            1. Longest I ever held wine–20 years–and it was anticlimactic I must say. At the time I was in the biz and was offered a couple demi-cases of the original release of Opus One consisting of a mix of 1979 and 1980 vintages. At twenty the ’79 was very good but the ’80 was just so-so, maybe past its prime, my storage methodology could be called ‘haphazard’.

    1. A4I, The former is about 6.15% and the latter is about 6.7%…Both BBB- S&P rated and QDI…Over time you have to remember EBGEF isnt necessarily the best deal..Yes its yield is higher and set for 5 years…But market knows EBBNF has the higher kicker and reset off 1.7% 5 yr US Tbill in 2017. So if on next reset in 2022 and 5 yr is at present yield of 2.65% ish, its yield will go up 95 basis points in effect making it a better yield in 2022. These resets are all going to trade off different variables besides present day yield. The future is hard to predict so you invest as to how you want to project future rate expectations and take your chances.

      1. Thanks, Grid.

        You’re basing those yields off of today’s selling price, correct – not the par pricing?

        1. Yes, off the stock pricing…Of course the resets from the company are based off par when next divi is reset.

          1. Grid, I haven’t read the prospectus on these issues. I recently bought some Enb Series 1 into IRA and did read that prospectus. It says pays “dividends” however it’s not it’s registered in US so no opinion is offered about QDI in US. It also says not to be sold to US citizen but I simply skipped over that part. I bought it into IRA in part to avoid the QDI question. I’m going fishing for awhile now and leaving my SCE-L for sale GTC.

            1. P, I have zero concern. I am sure it is, but its irrelevant for me.
              The ones I have in Tax Free are now not being taxed thanks to another online friend. And the ones in taxable, I reclaim on tax credit come tax time. In that situation it didnt matter to me whether they were withholding 15% or 100% because I am getting it back. I owe taxes anyways every year, so now I will owe less. Everyones tax situation is unique though.

      2. GRID: “The former is about 6.15% and the latter is about 6.7%”
        Canadian/US EBBNF & EBGEF has me a bit confused. May be wrong but:
        According to the prospectus EBBNF pays 1US$ and EBGEF pays 1.1US$.
        At the $25 price that’s 4% for EBBNF and 4.4% for EBGEF.
        At today’s prices of $20.15 & $19.75 that’s 4.96% and 5.57%
        I hope I’m calculating wrong because I thought I was getting EBGEF at 6.7%

        1. My dividend on 3/4/2019 was at 6.7% and tax was withheld in a TD Ameritrade non IRA account.

          1. Thanks everyone for the replies correcting me on EBBNF and EBGEF. I was getting my WRONG information from Enbridge website.

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