Storage giant Public Storage (PSA) priced their previously announced new preferred issue.
The coupon will be 3.875%–not a giant surprise since they priced an issue in August at 4.125%.
The issue is rated BBB+ by Standard and Poor’s and A3 by Moody’s. Investment grade.
The issue is cumulative and non qualified.
All of the company’s outstanding preferred issue can be seen here.
The pricing term sheet can be found here.
You know its bad when the ticker thumbs its nose at you. pSADl
I bought 250 shares at $24.85 and though I missed the low I basically have no complaints.
My take away from all the comments reflects my own sense of being powerless against a Federal Reserve that is seemingly beyond questioning, investigation or criticism of any kind. That’s in spite of 10 recessions since the 60’s, a failed policy of inflating the economy by creating asset bubbles that ultimately wiped out trillions of dollars of peoples savings and investment assets, as well as a record of the worst regulation of an industry among all its already incompetent government agency peers. I suggest reading Carmen Segarra’s “Noncompliant” if you want a sense of who these people really are.
From my point of view, the Fed engages in Financial Terrorism, and I mean that literally and the targeting and annihilation of the Middle Class at least those of us who are savers, investors and retirees?
The “Have Nothings” and Mass Media Monotony control the narrative and are knowingly or unwittingly doing the bidding of the Criminal Elite who have plundered and sucked America dry for the last 25 years.
Well most all preferreds took it on the chin today. 3 guesses why, first 2 don’t count. I read JB plans 7 in trillion new stimulus.
Better get used to low rates forever. We’ve been near zero for a decade, and when the fed raised to 2%, the market collapsed. Outside the US, the world has been at negative rates since the great recession. I’d say 2% fed rate is the max we’ll ever see again…and we may never even see that.
So here’s your choice:
https://docs.google.com/spreadsheets/d/1dzMltuNrsRhXywfcn0kiVGUe7KeABDm4odVSiz91E3g/edit?usp=sharing
As with most new pref issues you have the opportunity to vote your interest rate conviction. If you see rates staying low, or going lower, buy the best YTC, which is the new issue. If you see rates going up, buy the best current yield.
Or split the baby and do some of each.
It’s funny – because just a few months ago, there were similar comments about dismal rates when PSA issued PSA-L in June with a 4.625% yield. I know some questioned a few of us who purchased this – and this is the reason why. Rates continue on a downward trend for investment grade issuance’s. Unless you want to take on higher risk, this is the environment we are dealing with. You don’t have to like it but you better recognize it.
BTW – that PSA-L I bought below par at issuance in June is now trading at $26.75 for an effective yield of 4.32%
Now all that said, I will not be buying this new issue because I am pretty full with other PSA issues
maverick61 “it’s not funny”
I held my nose last year when I bought 600 shares of psa-j @ 4.70% in ’19, the “worse credit quality in my portfolio”, under $25.00, I’m a buy and hold guy, don’t flip because of commissions, figured I’d own “that” til the rapture?, no offense to anyone, a man’s got to do what a man’s got to do.
%
Maverick – Very well said! They really won’t like when 3.5% or 3.0% comes along.
But now, they have pushed the envelope so much, Dick, that there are many QDI preferreds (better returns) with higher yields and below par also one can buy.
I was able to buy at Schwab.
I agree that the rate is unattractive except in relation to a lot of other investment grade preferreds that offer yield to call’s even lower. Public Storage is just taking advantage the crazy yield to calls for investment grade preferreds. Smart move on their part
Here is their goal…To beat this one…They still got a bit more work to do..,
Niagara Mohawk Power Corp., 3.40% Series Preferred Stock
Ticker Symbol: NMPWP CUSIP: 653522201 Exchange: OTOTC
Security Type: Traditional Preferred Stock
QUANTUMONLINE.COM SECURITY DESCRIPTION: Niagara Mohawk Power Corp., 3.40% Series Cumulative Preferred Stock, par value $100 per share, redeemable any time at the company’s option at $103.50 per share plus accrued and unpaid dividends, and not subject to mandatory redemption. Distributions of 3.40% ($3.40) per annum are paid quarterly on 3/31, 6/30, 9/30 & 12/31. Dividends paid by this preferred security are eligible for the preferential income tax rate of 15% to a maximum of 20% depending on the holder’s tax bracket (and under IRS specified holding restrictions) and are also eligible for the dividends received deduction for corporate holders. Niagara Mohawk Power Corp. is a wholly-owned subsidiary of National Grid Transco plc (NYSE: NGG) as of December 2001.
Stock
Exchange Cpn Rate
Ann Amt LiqPref
CallPrice Call Date
Matur Date Moodys/S&P
3.40%
$3.40 $100.00
$103.50 any time
None Baa2 BBB
3/25/2020 3/31, 6/30, 9/30 & 12/31
Given the low interest rate environment for investment grade preferreds, I have stopped any dividend capture moves, and planning to hold on long term to my quality, good interest/dividend rate investments. I am also moving into some CEF’s that hold quality preferreds, acceptable dividends, and have long term track records (FFC, FLC, JPS, GDV, UTG, RNP).
As long as the Feds hold interest rates low, we will not see any new investment grade preferred offerings in the next few years with acceptable dividend rates.
I would rather bury cash in my backyard then take a rate like this. This is good for the common stockholders of PSA, but horrible for us fixed income investors.
It’s not because I – in theory – disagree, but before you start digging, you should look to Europe and see what 7 years of nirp have done to the yield of IG bonds and Corporate perps (closed thing we have to prefs.)
IMO it’s very likely that US/Canada will follow the same playbook. If that’s the case, you will probably see a 2-handle and maybe a 1-handle reset…
FWIW
PSA-N is trading today.
Temp symbol is PSADL.
Trading in the 24.80 – 24.85 range last I looked.
all these new rates are getting completely out of hand. I’ ll continue to look till “the next tide goes out”, rather than settle for this stuff, talk about the potential for lose of principle, I’d rather put what I’ve got under the mattress and take my chances.
Dismal