PennyMac priced an offering of baby bonds with a coupon of 8.50%.
The offering is a measly 2 million shares. There is a early redemption available to them in 2025 with full maturity in 2028.
The issue will likely not trade for at least 3-4 days but should trade by next week.
The pricing term sheet is here.
Too many to list at this stage.. but here are a few.
They are all price dependent.
MITT B/C
RITM/D
CIM/D
AGNCL
AJXA
AILLP
CNLHN
TFINP
1,000 par
PAA
The new CITI
RPT/D
After the recent discussions on PMT and NLY prospectus language concerning LIBOR -> SOFR I took a look at the CIM language.
CIM/D has the following:
“Notwithstanding the foregoing, if we determine on the relevant Dividend Determination Date that the LIBOR base rate has been discontinued, then we will appoint a Calculation Agent and the Calculation Agent will consult with an investment bank of national standing to determine whether there is an industry accepted substitute or successor base rate to Three-Month LIBOR Rate.”
NLY had similar language – So CIM D can reasonably be expected to honor their floating coupon obligation (IMO). Note that PMT is missing this particular language.
CIM D should start floating in H1 2024 and currently trades with a 9.44% current yield and a nice discount to par.
From a credit standpoint the CIM is risker than the PMT baby bonds. The CIM is a preferred stick and CIM itself has a much riskier portfolio than PMT.
FWIW
Traded some CIM-B for CIM-C. Superior if B goes rogue, whether C does or not.
CIM has 3 fixed floating issues the B, C and D. Of those three the C and D have the favorable language concerning substitutes to LIBOR. The B does not have this language.
So it will be interesting to see what they do with the B. The last fixed payment for both the B and D is set to be 3/31/2024, so it will be very interesting see how this plays out. The B has the higher spread over LIBOR at 5.79% with the D at 5.379% which is interesting as they both have the same coupon of 8%.
Were LIBOR -> SOFR conversion not an issue I would prefer the B, but given the difference in prospectus language – I would be inclined to pick the D over the B.
Not that I am such a huge fan of CIM mind you.
Does anyone know how Ellington Financial will be handling the Libor transition with their EFC-A preferred?
GS,
I didn’t see any announcement from them, but from the fallback language in the EFC-A prospectus (p. S-18), it sounds like they’ll transition to 3mSOFR + the 26.121 bps tenor adjustment, i.e., the “industry accepted substitute or successor base rate.”
I’m no lawyer, though. An email to their IR Dept. may get you something more useful than my guess.
“Notwithstanding the foregoing, if we determine on the relevant Dividend Determination Date that LIBOR has been discontinued, then we will appoint a Calculation Agent and the Calculation Agent will consult with an investment bank of national standing to determine whether there is an industry accepted substitute or successor base rate to Three-Month LIBOR Rate. If, after such consultation, the Calculation Agent determines that there is an industry accepted substitute or successor base rate, the Calculation Agent shall use such substitute or successor base rate. “
The Egan Jones BBB+ is icing on the on the cow pie.
given how they are trying to screw over their preffered sharholders with their fix to floating issues now being fixed ill have nothing to do with his company
Nope, me either – I had a few shares of the preferreds and dumped them after those shenanigans.
Thanks Tim. It’s def a pass for me. If I want yield, I will buy one of the many discounted FtF MREIT prefs.
If I want safety, plenty of other options with yield in that ballpark.
Maine, Which preferreds do you like and any stand out reasons why?
Thanks
It’s a good question. Me thinks we could use some boards dedicated to buyers favored positions.
Just fyi
Jxn a
Lnc d
RF b
SNV d and e
Cfg d
Ahl c
Vlypo
C J and c k
Wfc
STT d
Zionl
Apos
Maybe 15 others. Know what you are buying!!!!!
Hi Dave–let me give that some thought.