For the 3rd or 4th time Priority Income Fund (not publicly traded) has filed a registration statement for a new preferred issue.
The previous statement was for a ‘perpetual’ preferred–the new one is for a ‘term’ preferred–yeah!!
The new issue will have a mandatory redemption in 2029.
The new registration statement can be found here.
While PSEC will always have a bad reputation, it has been many years since this reputation was burnished, and in the meantime all these years later their debt & preferred securities have been winners. PRIF has also done well with bank loan CLOs performing quite well, with underlying bank loans with virtually zero defaults. Preferred gets benefit of asset coverage at nearly 3x based on current balance sheets. Even in the height of the fear March 2020 asset coverage remained nearly the same. Note sure what it would take to see a 66% impairment across the CLO portfolio but it would be a more massive negative event than we saw in either 2008-2009 or 2020. I hold large amounts of these terms preferred which I consider virtually bonds, as the company does not have other debt ahead of it.
Has anyone really dug into their holdings? Leveraged debt and a gargantuan pool , as well as management by testosterone, seem to have a familiar ring. I only have 200 of the Gs still with a standing sell order. What could go wrong?
From a prospectus, “whose debt is rated below investment grade or, in limited circumstances, unrated, which we collectively refer to as
“Senior Secured Loans,” with an emphasis on current income. These investments, which are often referred to as “junk” or
“high yield,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay
principal.”
I’ve mentioned this before. I am not a fan of serial issuer Priority because they are just the PSEC people reincarnated into a second moniker, but having said that, one plus if one wants to participate in this playground, there is the benefit that you’re playing with a fund, thus spreading the risk of being there… It’s the same as with other BDCs and equivalents… So you have to have warm fuzzies for the management that they know what they’re doing….. Worst case would be you get the second coming of the Taube Brothers who ran the Medley names into the ground.