New Residential Investment Prices FTF Preferred Issue

New Residential Investment (NYSE:NRZ) has priced their new offering of fixed-to-floating rate preferred with an initial coupon of 7.125%.

This seems to be 1/8% below what the original guesses were for this coupon. Importantly to investors the spread of 5.64%, once it begins floating, seems investor friendly.

It will be very interesting to see how this issue of 10 million shares trades tomorrow (Thursday). The company has a FTF 7.50% issue outstanding which was trading in the $26.50 area until today when it fell as low as $25.80 before recovering to $26.20. It is likely we will not have a personal interest in this one for a long term hold. Whether we want it for a ‘flip’ will depend on initial trading on the OTC Grey market.

The pricing term sheet can be seen here.

11 thoughts on “New Residential Investment Prices FTF Preferred Issue”

  1. Bought a bit just under par but really not that excited about it. I don’t see this as a great flip, their other issue is better and only trading at $26.20. I’ll just hold, should hang around par as long as shit doesn’t hit the fan.

    1. If it’s not a flip then A is a strong sell. Significantly lower yield to call and slightly lower yield post call at those prices. Should be less than a 75 point spread by my calculations. If A falls I’ll re-evaluate B.
      Somebody wrote a hit piece on SA this morning with inaccurate data. Maybe that’s why NRZEP slipped a couple points below par.

  2. Grabbed 3000 shares planning to flip most of them. they;’ve already sold almost half of the allotted shares. Wonder why the underwriters aren’t holding out for a higher price with that kind of demand.

  3. Also picked up some (just 100 – was all the free cash I had at the moment). I also have 100 of their series A, and 290 of the common, so wasn’t trying to increase exposure that much.

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