Quiet Action in Income Markets-Update

The income issue markets haven’t moved too much in the 1st two days of the week–the average preferred stock and/or baby bond is off 3 cents this far.

We do see the Callon Petroleum $50/share preferred getting whacked by $1.50 as shown here. UPDATE–CPE has mentioned they will be redeeming their 10% preferred stock. We also note that 4 of the Colony Capital preferreds have gone ex-dividend today as shown on the ex-dividend calendar here. Maybe there is a bounce to be played in the Colony issues.

The 10 year treasury is back down in the high 2.40%’s after the trip into the 2.50%’s last week. Of course we are most curious as to which way these interest rates will break–seems to me that with the never ending conflicts in economic data there is little reason to move either direction–only political types of items are likely to move rates sharply (i.e. China trade deal, various tariffs with the EU).

Of course I still await on the pricing of the new Sotherly Hotels preferred – seems like they are having a bit of a problem getting it priced to the satisfaction of all parties – these things should be more buttoned down before they announced the new issue. Doubtful we will have any interest in the new issue since they already have 2 issues outstanding with 7 875% and 8% coupons and if we wanted it we would have it already. I have owned the baby bonds which are being called for quite some time—and am sorry to see them go.

12 thoughts on “Quiet Action in Income Markets-Update”

  1. Tim,
    I thank you for hinting Callon Petro weakness in beginning of the year. I sold off all my shares of CPE-A mainly because CPE never paid any dividend to its common shareholders. Always good to decrease these shaky positions and drama.

    I sold quite a few AHT preferreds in the past few months. I hold quite a few CLNY preferreds including the “original Colony preferreds” since its IPO way back, CLNY-G 7.5% coupon. Sold remnants of CLNY-B but continue to hold CLNY preferreds including the lower coupons. Yes, CLNY has had two toxic CEO’s, failing to continue the Northstar’s risky out performance. It does seem, however, that it is attempting to deleverage a little better ratio using a quick and dirty (Enterprise value – Market Cap) / Market cap, around 6 vs. AHT’s 7. I still have many preferreds on both of these two companies.

  2. Interesting that so many sellers of CPE-A know it will be redeemed even before the company makes an SEC filing or issues an official press release.

    How can this be anything but a rumor at this point?

    Is this the new definition of the efficient markets hypothesis?

    Dura Ace

  3. SOHO is a small company with thin margins and a lot of debt relative to equity. In a downturn, I would think the company could get into trouble rather quickly. I would not want to be anywhere in this company other than at the top of the available capital stack. No pref, cumulative or not.

    Does not surprise me it is slow to price.

    But it is internally managed, which I like!

    1. Looks like Callon sold some assets with the intent of using the money to retire the preferred shares. Sad to see it go. I got it at a good price, and was in it long enough to make money, but not a huge windfall by any means.

    1. Colony financials are shaky! I believe the trade in the Colony preferred stocks is the E issue. It has a 8.75% coupon and is trading at $25.15. It is a carryover from NRF and has an ex dividend date around 5/9/2019. It should return to $25 as the other preferred issues are all trading in a 8.10% to 8.25% yield range

      1. The CLNY issues have been strongly tax advantaged, so the yields are even better than they look. Agree that it’s not the strongest REIT around, and the CEO is toxic.

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