Ouch!! Truist Financial Prices Preferred

Banker Truist Financial (TFC) has priced the previously announced preferred issue.

The issue prices with a 4.75% coupon. The banker is investment grade, although not strongly investment grade–this is a crazy coupon, but likely they will have no trouble selling the issue.

With a coupon this low the currently outstanding, and redeemable, issues at 5.20% could be at risk of being called, but they are trading at just a tiny premium over $25 plus accrued, so they is little call risk.

The pricing term sheet can be read here.

7 thoughts on “Ouch!! Truist Financial Prices Preferred”

  1. The ten year is now 0.538%. If not a new low, it’s very close to one.

    We are going to have to get used to lower coupons unless something changes

    1. Has anyone seen commentary on the odds of regulators requiring nonpayment of preferred (noncumulative) dividends along with common should bank balance sheets worsen? Forgive me if I have a missed a comment on this site, to which I would give the most credence.

      1. Regulator reports are confidential. I’d keep an eye on the P&L and capital ratios. It all depends on what loan write-offs become necessary over the coming months. That’s what they are raising additional capital to cover.

    2. Low rates mean lower coupons. High risk means higher coupons. So I’m not convinced we have to get used to lower coupons. Risk outweighed rates in March.

  2. I own a full position in Truist 4.800% 12/31/2099 (89832QAD1), and it’s only just come out of the doghouse. I’m guessing that they waited for it before floating another.

  3. They ARE marginal investment grade! Surprising. To reiterate what I wrote yesterday, the common is a better investment, imo. Also, don’t like non-cumulative, which means I won’t own any bank preferreds. Thank you, Dodd-Frank.

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