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DXB officially called?
https://www.sec.gov/Archives/edgar/data/1159508/000090342320000024/deuag6k_0323.htm
Apollo Global Management (NYSE:APO) shells out more than $1B to seize opportunities linked to 10 distressed companies and is drawing on additional funds from investors to pursue more, Bloomberg reports, citing a person familiar with a private briefing of limited partners yesterday.
In the call, co-heads of private equity investing Matt Nord and David Sambur said they’re tracking more than 250 potential opportunities to acquire distressed assets and pursuing chances to enhance returns by snapping up its own portfolio companies’ discounted debt.
The two see the the market volatility caused by the coronavirus pandemic as a “time to shine,” they said in the call.
The firm has called on ~$500M of commitments from investors in its eighth flagship private equity fund last week. They expect to use ~$2B in available dry power to “build value” in the current market environment.
The firm’s investment committee approved $1B of distressed investments from the ~$18B of dry powder in Apollo’s ninth flagship fund.
Still, Apollo expects to mark down its private equity portfolio by 15% to a “low 20%” figure in Q1, the executives said. Most markdowns may be temporary, they said.
The Board of Trustees of AllianzGI Convertible & Income Fund II (NYSE: NCZ) (the “Fund”) announced today that the Fund has postponed the payment of the previously declared (March 2, 2020) dividend on the Fund’s common shares scheduled for payment on April 1, 2020 and the declaration of the next dividend on the Fund’s common shares, which would have been paid on or around May 2020.
Accordingly, the declared dividend ($0.0450 per common share for NCZ) payable on April 1, 2020 to shareholders of record on March 12, 2020, with an ex-dividend date of March 11, 2020, will not be paid on April 1, 2020.
The Fund is not permitted to pay or declare common share dividends unless the Fund’s preferred shares, including its auction rate preferred shares and cumulative preferred shares, have asset coverage of at least 200% (the “200% Level”) after giving effect to the payment or the declaration of the common share dividend, in accordance with the Fund’s Bylaws and the Investment Company Act of 1940, as amended. Recent market dislocations have caused the values of the Fund’s portfolio securities to decline and as a result, the Fund’s asset coverage ratio has fallen below the 200% Level. The Fund intends to resume paying and declaring dividends as soon as possible. An announcement regarding actual dividend payment and declaration dates will be made at a future date…
https://finance.yahoo.com/news/allianzgi-convertible-income-fund-ii-132500981.html
Did get my NCZ-A dividend today.
Does anyone think they will have to redeem NCZ-A? I saw this on Quantum
” The Fund may also be required under certain circumstances to redeem the Preferred Shares before or after 9/11/2023, in order to meet certain regulatory or rating agency asset coverage requirements (see prospectus for further information). .Prior to 9/11/2023. the Fund reserves the right to redeem the Preferred Shares at any time if it is necessary, in the judgment of the Board, to maintain its status as a regulated investment company (a RIC). The Preferred Shares will be subject to mandatory redemption if the Fund fails to satisfy certain asset coverage tests (see prospectus for further information).”
NYMT – suspending common & preferred dividends
https://www.nymtrust.com/news-releases/news-release-details/new-york-mortgage-trust-provides-update-status-financing
Fred, I make no judgement on this issue, but I appreciate you posting this for newbees. Unlike the SA writing fools who tout preferreds as safer than commons dont acknowledge the razor thin layer of safety preferreds have with commons. Many times a company will get in trouble and suspend them both at the same time. Here is a good example.
Gridbird, have you ever seen dividends suspended on common, preferred and baby bond issues of a company at the same time ? Just wondering for the future if BB’s are a better choice for companies that are not investment grade or non-rated ?
Bill the baby bond market is a relatively new phenomenon. Twenty years ago they were issued as trust certificates sliced off an actual trading bond. A few of the baby bond ancestors still exist…KTH, KTBA, KTN are a few left.. The best examples would be trust preferred “baby bonds” issued by banks. And yes some did get suspended. Most got repaid because of the process of TARP. Feds arent allowing that again.
As you have noticed some baby bonds are issued as 5 year deferrals. This is essentially is a way to get a tax deduction and the market view it as a preferred at the same time. In fact rating agencies generally assign a good portion of those types of issuances as “equity” even though it is technically debt.
Fred: I had a feeling this one would be the first to fall in my preferred portfolio so I sold it awhile back while I still had a buck a share profit left. Should have done it sooner when I had $2.25 a share 🙁 Small position anyway, never felt that comfortable with this issue.
02/25/2020
Sell
Trade Details
NYMTN
NEW YORK MORTGAG 8% PFDPFD SER D DUE 12/31/99
100
$25.81
$0.06
$2,580.94
Prospect Capital is making a $17 tender offer for PBB notes (6.25% due 2024). PBB is trading over $18 and par value is $25.
Does this make any sense?
MFZ–when they made the original tender it was below $17
CorEnergy Announces Repurchase Program
Mar 23, 2020
KANSAS CITY, Mo.–(BUSINESS WIRE)– CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) (“CorEnergy” or the “Company”) today announced that its Board of Directors has authorized a repurchase program for the Company to buy up to the remaining amount outstanding of its 7.00% Convertible Senior Notes due 2020, and up to $5million of its common stock and 7.375% Series A Cumulative Redeemable Preferred Stock. The Company plans to repurchase notes or shares from time to time through open market transactions, including through block purchases, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any repurchases are to be determined by senior management, depending on market prices and other conditions.
“With a strong balance sheet and more than $250 million in available liquidity, we believe 2020 will present attractive portfolio growth opportunities for our company,” said Dave Schulte, Chairman and Chief Executive Officer. “However, our board also recognizes that repurchasing shares or notes in this unusual time is an attractive investment opportunity.”
Purchases of notes or shares will be financed with general corporate funds. The repurchase program does not obligate the Company to acquire any of its notes, common or preferred stock, or to acquire any particular number of notes or shares, and the program may be extended, modified, suspended or discontinued at any time at the Company’s discretion. Purchases may be made through the program through August 20, 2020.
Given that they stated earlier in the year that they planned to call A, one would assume they had the cash; and now can do the same at less than half the cost, so why not? And why hasn’t the market responded with more enthusiasm? Common is up much more, and there they have the option of decreasing divis to conserve cash.
If they call they’d have to pay par I believe. Also note they may buy in “ privately negotiated transactions”. Wonder if they’ll be bailing some folks out.
The press release says 250M in available liquidity. So with 2M preferred shares outstanding, I guess they could do this. Would cost them 50M of their liquidity.
How realistic is a share buyback at this point? If they can get a small business loan under a bailout package, it will likely limit share buybacks.
Perhaps the press release is more to tell the market their current available cash that have access to.
The CORR convertible notes, CUSIP 21870UAA4, have a $1000 face value, mature on June 15th of this year, and are convertible into the common at $33. The common last traded at $19 and change so maybe the call option isn’t worth much but I hold some of the notes at E*Trade and they show in my portfolio at 54 cents on the dollar. There are no bids nor offers showing online so maybe they are not actually available at that price but it seems to me that they would be a good buy at anything close to it. Why is the market pricing them so low?
More details about what Ready Capital is doing available on their website. Common shares go ex-dividend 3/31. Looks like you’re being asked to make an election as to how much cash you want to receive with 20% being the maximum allowed. http://ir.readycapital.com/file/Index?KeyFile=403365347
Ready Capital is either getting creative or is getting into trouble…
Might soon affect RCP, RCA, RCB senior and/or convertible notes. Might not. Just relaying.
Dow Jones Newswires: Ready Capital Corp to Pay Previously Announced Qtrly Div on Common Stk of $0.40 Per Shr 20% in Cash and 80% in Stk
Sotherly Hotels cancels record date for preferred stock dividends
Mar. 20, 2020 5:10 PM ET|About: Sotherly Hotels Inc. (SOHO)|By: Liz Kiesche, SA News Editor
Sotherly Hotels (NASDAQ:SOHO) clarifies that it cancelled the March 31, 2020 record date for the preferred stock dividends that it’s deferring.
The company expects to set a new record date for future dividend payments when approved by its board.
Previously: Sotherly suspends dividends, slashes costs (March 18)
We are only a month into this and its moving faster than 2007 and 2008.
This is any indication we still have a ways to go. Back then, banks started calling home equity loans that contractors took out to finance their business. I had customers who put out money for supplies for next job and still waiting to get paid from the last job when banks called their line of credit. Was a triple whammy. jobs got cancelled, clients wouldn’t pay what was owed and bank calling their loans. everyone lost. People flipping homes on speculation couldn’t sell and pay loans back. got ugly.
I worked at the time for a company that had been in business 128yrs and over extended itself. When one of 2 banks withdraws your line of credit and the other ( WFB ) reps change clothes from dress casual to business suits you know your in trouble
Someone here was asking about banks, this crash is going to affect even them. Now a interesting question, anyone remember Leman Bros. ? what is possibility we see brokers in trouble ? TD, Intractive, Fidelity, Schwab I think sensed this coming.
GRID
it appears that IPLDP declined slightly more than some of the other issues in this series. Do you attribute this in part to the greater availability of it which meant that if people needed to raise cash that they could sell and these sales reduced the price or were there other considerations? I don’t think that one issue is likely to be more risky than another. Would value insights on why IPLDP might have experienced a greater decline. TIA SC
EAB and ELJ
On another issue, ELJ appears to offer the same terms as EAB but at closing prices, ELJ has a slightly better yield. Is there anything that makes ELJ more or less attractive than EAB or is it just the volume of units available and lunacy
of the market? It appears that they are basically offering the same terms. Much appreciate your willingness to handle these questions. sc
SC,
I’ll jump in here. Believe it or not, the difference in yield between the 4.9 for EAB and 5.25% for ELJ is treated very differently. Anything with a 4 handle typically drops like a rock when interest rates rise. If I’m not mistaken, we had some pretty big swings in the 10yr treasury this week and it spiked up quickly. The 5.25% flavors will be a bit more stable price-wise when rates slosh around. We’re also seeing forced liquidations, liquidity issues, huge bid-ask spreads, margin calls, ETF/CEF implosions and all kinds of ‘non-normal’ behavior right now with very abnormal volatility. All of these events lead to irrational behavior and pricing. These things are like the weather in Alaska. If you can’t make sense of it, wait an hour and it’ll change.
You’re asking all the right questions… That’s pretty impressive. Just try not to get too hung up on figuring things out in this irrational market period. These things wouldn’t normally slosh around like they are right now. There is a ton of stuff not making sense to me and I’m scratching my ole’ noggin bald watching some of the crazy fallout.
AFFINITY-
thanks your kind words and insights. As a relative newbe to uts and preferred offerings, I’m always concerned that I am missing something. I have a bookish background and when it looks too good, it generally is not so I thought I would use the opportunity of this site to ask.I really appreciate the community and only wish that I could contribute greater insights.
Re RC- one thing to keep in mind about them for now is that they are still probably involved in taking in the firm they bought about six months ago. This Q’s performance was much better than last. The company is interesting and worth watching. You might also want to check out acre if you have not.I liked abr as well but in tough times, the parent company of acre can provide more support.Both stocks are down big. I don’t own any of their preferred issues so can not comment on them. Thanks again. best SC
One way or another, I think we’re all newbies in some way because there is always something new to learn about. I appreciate your questions because it makes me go do some research to make sure I’m giving correct info – or at least trying to 🙂 Of course in this market, many of the ‘standard playbook actions’ are being tossed in the wind and succumbing to fear, panic, and the unknown. As much as I want to jump in and buy hand over fist, I’ve had to take my foot off the gas until I see how the market reacts to the stimulus coming out of Congress – should it hurry up and get out of there and be ready for signing. I think instead of trying to please everybody on both sides and make the bill ‘great’, they should just use the basic things they agree on and push it out the door – then go right back to work on the next phase.
SC, just remember at the base core true preferreds (not baby bonds of various cap stack ilk) is basically an offer to pay dividends in a perpetual manner if not redeemed by company provided the board declares them. So one is betting on survivability of company to generate earnings commiserate with that promised dividend payment. Assuming the above goes well, it then basically is an income stream that will have a constantly fluctuating residual selling value as determined by the market… And it can vary widely. Take higher quality, 6.56% $50 par issue, CNTHP.
It has always paid since 1960s issuance. Going back to early 1990s CNTHP has sold for as low as $32 in 1992 and as high as $63.50 this year. Many factors and variables can determine that pricing value. And not much we can do about it
GRID
thanks, I don’t mean to over due things but since the market normally sees things fairly clearly, I remain uncertain why two issues with the same set of coverage i.e. eab and ELJ are selling at such different yields. Could be the volume of outstanding shares or could be another issue which is less clear. That was the thrust of my question. Have been mentioning EAB often but not ELJ. Understand that you can not love them all or own them all but still found it interesting. Thanks again for your willingness to explain things.
PS yes do understand that these issues are buying a cash flow.The concern is are there any considerations not appearent that could stop the cash flow.
thanks again. best sc
SC, I am not seeing what you are seeing. I see EAB at current 5.64% and ELJ at 5.63%. One has an approaching interest payment and one just went exD last month so a bit wider. But since we are dealing with extreme volatility they are actually at this point in pretty much tandem as far I see. The pricing issuance yields are different but they were issued 6 months apart. That then current pricing environment and possible variance in ratings in 2012 may have contributed to the different yields when coming to market.
Though I havent specifically with these two it provides a good example. Since they are comparable quality and sector, this is type that if one drops a buck or whatever predetermined amount, and other hadnt, you sell latter and buy the former, rinse and repeat. That is a way to goose returns in a normal market, of course making sure nothing is materially wrong with the former other than a buy/sell imbalance.
Grid
thanks your clarification. So really the two offerings are the same. I’m not sure how I found the yields but that is less important than your confirmation that the two offerings are very alike in terms. Much appreciate your timely reply. Enjoy the day and be safe. SC
SC, Lol…I get it now… I first read your post and couldnt understand what you meant as IPLDP is the only series outstanding from either of the 2 utilities owned by Alliant…But I think I know the problem..You are confusing Interstate Power and Light with Indianapolis Power and Light…Interstate Power and Light is (IPLDP) is owned by holding company Alliant.
Indianapolis Power and Light is owned by hold co IPALCO Enterprises which in turn is owned by AES. Indianapolis Power and Light has a slew of mostly very old preferreds such as IPWLP, IPWLG, and IPWLK, etc….So they have nothing to do with each other as they are separate unrelated utilities with separate unrelated holding companies.
Most illiquids have held up considerably better than liquid preferreds in general. IPLDP is a liquid one, so it has been more volatile. The reason why is the financial underpinnings of the market have been in upheavel. This is causing liquidation and dumps from funds and leverage etc. It isnt mom and pop causing all the turmoil.
These old illquids such as the Indianapolis Power issues are not generally owned by these preferred fund outfits that face issues including their leverage use and redemptions. They were issued long ago and their floats are considerably smaller. They largely have become institutionalized and just dont trade to any degree at all. In fact most of the Indianapolis Power preferreds have been redeemed through tender offers 30 years ago except IPWLK which its 50 mill float remains intact..But still you could combine every Indianapolis Power preferred and it wouldnt equal half the IPLDP size in terms of float. And at $200 million IPLDP is also really not a huge float either.
GRID-
What can I say i.e. only one cup of coffee . Actually pleased that you had a laugh and impressed that you got through it. Yes you more than answered the question.
If I could trouble you, just below that one is a second i.e. asking about ELJ which looks on yield to be marginally more interesting than EAB and yet it is rarely if ever mentioned . Does it have any issues which make it less attractive? Thanks again and much appreciate your on going willingness to deal with these quesitons. SC
Great Elm is doing the same thing I believe
From GECC 3/19 news release: “In March 2020, our Board set monthly distributions of $0.083 per share for the second quarter of 2020. The distributions will be paid in cash or shares of our common stock at the election of shareholders, although the total amount of cash to be distributed to all shareholders will be limited to approximately 20% of the total distributions to be paid to all shareholders; the remainder of the distributions (approximately 80%) will be paid in the form of shares of our common stock.”
Smart decision by Ready
Preserve liquidity but maintain the dividend giving most in stock. Far better than the alternative of eliminating the dividend.
This may have been discussed already but does anyone know the status of the partial call of DX-B? I called my broker but never managed to get a person on the phone.
From my position they called 379 shares out of 1000 or 37.9%
Compare these two securities:
MGR current price 22.20 yields 6.6 matures 2059 at 25 , callable
AATRL current price 30.25 yields 8.5 matures 2037 at 50 , not callable
Same issuer, both subordinated debt. If you have MGR, straongly suggest a swap. AATRL is a good buy relative to MGR.
Only do the switch in a retirement account. AATRL has some really adverse tax consequences, which is why it is so cheap.
I have some in a taxable account. What are the really adverse consequences?
Martin – From the prospectus, “Certain United States Federal Income Tax Considerations section, p 9:
“By acquiring the trust preferred securities, each holder of trust preferred securities agrees to accrue interest on a constant yield to maturity basis at a rate comparable to the rate at which AMG would borrow in a noncontingent, nonconvertible borrowing, 8.0%, compounded quarterly as well as to the reasonableness of this “comparable yield.” As a result, each holder generally will recognize taxable income in each year significantly in excess of distributions (whether fixed or contingent) actually received in that year. If the holder purchases the junior subordinated debentures (through a purchase of the trust preferred securities) at a premium or discount to the debentures’ adjusted issue price at the time of purchase (measured with reference to the adjusted issue price of the junior subordinated debentures, which is the first price at which a substantial amount of the junior subordinated debentures were sold to the public and increased for accrued interest and decreased by projected payments that relate to prior periods), the holder will be required to allocate the discount or premium over the remaining term of the junior subordinated debentures. Additionally, a holder generally will be required to recognize ordinary income on the gain, if any, realized, including the fair market value of stock received, on a sale, exchange, conversion or redemption of the trust preferred securities (or junior subordinated convertible debentures).”
RetiredBroker -Thanks for the tip. Hopefully it will work out. I picked up an extra 2% in dividend.
Somebody got a few shares between $16-$18
Did you notice it dropped to c 18 at the close? Might have been a single bad trade, any idea? I was tempted already when it went to low 40s.
PBY tender offer by March 26..Price $ 17 per share.
My buy was at $18 a few days ago, when i noticed huge Insider buying by officers. I made that public here a few days ago.
See if i am correct.
Question..Do you tender it at $17 or wait it out?
https://www.marketscreener.com/PROSPECT-CAPITAL-CORPORAT-10554/news/Prospect-Capital-Corporation-Announces-Launch-of-Cash-Tender-Offer-For-Any-and-All-of-its-Outstandin-30195917/
TIM
could u explain why eab is listed both as a bond and a preferred. Not sure I understand why that would be. tia sc
sc–it is a baby bond—some folks use the terms interchangeably–incorrectly.
Maybe I’m missing something, how do you figure it’s PBY?
I show PBB due in 2024 and PBY due in 2028. The tender is for notes due in 2024. So I think it’s actually PBB, not PBY.
Not for PBY which has a maturity date of 6/15/2028. Tender is for PBB. Check the CUSIP: 74348T300
CA entered a mandatory lockdown effective midnight Thursday. 40M have been told to stay home. Pharmacies, groceries, restaurant-takeout, and banks will be open with limited hours. Groups of ten or more have been banned. This order is in effect through April 19.
Many businesses and jobs will be permanently destroyed. Millions of paycheck to paycheck and hourly workers are out of work for a month. A vast swath of the population are hourly workers.
State detention notwithstanding, the virus will eventually course its way through the entire population. Slowing the rate of infections is important, though this overreach will come with its own consequences. Holders of ESS may want to review their options.
Not sure if this was posted on the site already but might be of interest to people here who own the $TWO Preferreds. Doesn’t sound great but I’d be surprised if they suspend payments on those. But the fact they mention them is concerning, though could just be because they are delaying the announcement of their dividends. I would expect a drastic cut on the common, I am not a current holder here..
https://www.briefing.com/in-depth-analysis/Content/Article?ArticleId=IN20200319181842TWO
Concerning DXB – Deutsche Bank Contingent Capital Trust II, this is what IR had to say:
“As announced in our release last week (https://www.db.com/ir/en/download/2020_03_11_IR_Release_Deutsche_Bank_announces_decision_to_redeem_Trust_Preferred_Securities_and_not_to_call_Additional_Tier_1_Notes.pdf) we intend to redeem Contingent Capital Trust II on 26 May 2020 – the formal redemption notice will be issued during the 30-60 days call window.”
Redemption date is 5/26, ex-date is 5/21, redemption payout + final dividend is $25.4094.
DXB is currently trading at ~$22.75.
Picked a few up. Thanks!
RNR-C and ISG both been called but they are trading 30 – 40 cents under par. Does this imply they may reverse the calls or it’s just because of market wide sell off?
Discount on RNP now at 31%. Ordinarily I would ask how this is possible, but in this market…..
I think fueled by this oversized discount….RNP now up 23% and currently still rising.
Passive funds doing their bit today. Haven’t seen anything like this. If anyone thinks the market is “pricing” something, I don’t think so. It’s just the passive funds doing what they HAVE to do to cover redemptions.. The only exception is prob the hotel/morrgage reits and the energy stocks. Those are gone for real
GRID
On another issue, between IPLDP and SRA which would u consider as the more secure. By this I mean less likely to have serious problems. ? It would seem like IPLDP might be marginally better but would value your views. tia sc
Ipldp at 20.51!!
My opinion wont pay for a cheap 25 cent worthless paper germ mask but I will offer it. But its just based on pricing and market history. And its just in terms of relative payment security not pricing as its all bad…
But remember these ute issues are down 20% off par while everything else is down close to 50% or even considerably more. IPLDP is just now hitting its 2013 market lows during taper tantrum. If you go through history of ute preferreds they just werent offered a lot above 6% ever. Heck PPWLM was issued in mid 70s with a 7% yield as Utah Light and Power when 10 year was 6-7% and inflation high. And Utah Power and Light was a weaker power producing ute at that time before later being bought out.
But we are in turmoil now, so its impossible to predict a bottom. I cant say either is value with prices dropping! The underlying credit market needs to get settled and sellers out of the market. Ute preferred UEPEN at $89 and a sub 4% yield with no pricing drops is no safer just because it hasnt dropped any. In fact IPLDP credit rating is higher. UEPEN just doesnt have any selling action. And incredibly there is a bid of $88.25 out there.
Even though both gas and electric utes are regulated the nod in safety has always leaned a bit to the transmission and distribution regulated electric utilities. Value could change second to second. Sorry I am not much help. If I was truly smart I would have sold everything 2 weeks ago. 🙂
GRID
clearly there are no right answers and yes hindsight normally clearer than foresight. You comment does not include any words on SRA but presume it is covered by the general commentary. Thanks your timely reply. SC
SC, Sorry didnt get specific, but gun to my head IPLDP, is probably safer in terms of dividend. But I am not losing sleep getting paid with either. Dont like the stock price drops though. A4I mentioned this also with Sempra, but Spire is another example…The common stock is up 3% past 5 days and the preferred SR’A is down 20%. If there was any possible existential threat the common would be pounded in sympathy. Im not worried either way. I actually own more SR-A than IPLDP but dont know which will get to $15 first. 🙁
I picked up ALEVE at 8.69
Also bought PREP-H which is not liquid though.
Not to be “RASH”
Hopefully this will “BOIL” over soon.
Great stuff Newman! I think I will do proper due diligence on your suggestions. 🙂
Grid
I too do not know which will get to either 15 or 25 first. One very clever guy I know was saying to sell all equity and near equity i.e. preferred issues a month ago as you mentioned. He still does not think that either preferred or bonds have reached their buy point which would be in his view when firms start going bankrupt. He sees total lack of liquidity and a fed that has shoot all their wad so that they have no more to go. Hard to envision it getting worse but his take is that the buy point is not capitulation unless that is linked to some firms going under. Not all will but hard to call. To me it seemed like buying high quality ut baby bonds would be a play now but even these to him are open to problems until there is a clearing out of weaker players. He may be a bit too pessimistic but that is his take. Food for thought. Best and thanks again your reply. SC
SC, very cogent points. And it is stressful for those that need this income. Entry points and exit points are always very unpredictable. I am not confident in my skills to pick either way, so I stay invested. Last 2 days have been the worst. Im down now 15%. Basically the last years gains up in smoke!
But for me, all I can do is control what I can since I am committed like the hog is to breakfast.
So what does that mean for me? Even though I got red welts to my arse, I have actually taken this beating like a man and have increased my income dollars (not yield as that was a given with sell off,) going forward AND increased my credit rating safety levels. For example EAB…I largely had dismissed it through the years, for dearth of yield, but a few commenters here (thank you) had been kicking the tires and it made me put it on my tracking list. People who dont really understand cap stack need to know, how seriously powerful A2 Mortgage backed baby bonds are. They are higher than the senior unsecured which is typically the highest most utes will go.
KEY TAKEAWAYS
A mortgage bond is a bond backed by real estate holdings or real property.
In the event of a default situation, mortgage bondholders could sell off the underlying property backing a bond to compensate for the default.
Mortgage bonds tend to be safer than corporate bonds and, therefore, typically have a lower rate of return.
At 6.3% sign me up! They may go to 7% or 8%, I dunno, but Arkansas biggest ute would have to go belly up and divi up the proceeds, which would come to me… Subordinated debt you get a handshake and thanks for playing typically. I bought more KTH, subordinated debt but once a again Pa biggest utility. S&P rates A-3 and Moodys BBB- (though they are seeing the light as it a couple years ago was A3/BB+ split. I got the term date of 2028 there as a consolation prize. I bought more at $29.14 (6 month $1 interest payment comes next month increasing effective yield) Come 2028 it will pay $27.10 so what it does is largely irrelevant until then.
Some of these utes have already been bouncing near 2008-09 lows price points. I concede it could get worse. Only 3 utes since Great Depression have went belly up.. Public Service New Hampshire and El Paso (Nuke disasters and Nuke financial building disasters) and favorite whipping boy Pacific Gas which was so successful in accomplishing the feat twice and it appears the darn preferreds get paid both times in full). So needless to say you know where my bread is buttered. If you see the wrong half dozen to dozen utes suddenly go bankrupt its off to the salt mines I go!
Grid
The market is made by different approaches. I like buying EAB at 19 and holding paper with a par of 25. If I understand you right, should the company go under, then anyone who takes over the plants would have to issue new paper to the EAB holders before they could resume operation. Once again, buying at such a discount, even if u get less than par you have a good shoot.
That sounds like a smart move. Luckily, I’m less committed to staying fully invested than you are. What this means is that after having taken what others thought were large risks in the past, I’m now in an asset protection mode and only taking risks when I fail to understand them- which is more frequent than my wife would like. I have great admiration for your willingness to share and the breadth of your utility understanding. If it were biotech, I might be able to contribute but this stuff is above my pay grade so to speak. Thanks again for the insights. SC
SC, you are 100% correct there are different approaches. And one should do what works for them and understand the risks in any strategy. Personally I am not wealthy, but I dont need any of the income or my investment money and have no to plans to. So for me in theory (and I dont like theory, ha) prices staying down an extended time is actually beneficial for me long term since I would be reinvesting all proceeds. I dont really want to enlist for that strategy, but I may be drafted into that army though anyways.
Yes, your interpretation of the mortgage backed debt is correct. And actually it is superior to any of the Entergy holding company debt also. All subsidiary senior debt is superior to the holding company debt. Many may not be familiar
with that. This is where also “ring fencing” and all that terminology comes when we a state utility is bought out. The hold co owns the common stock of the subsidiary, but regulators in many states allow purchase to go through. But wall off finances in many ways and limit commingling to protect the local ute from the more debt laden holding companies.
GRID
i’m sorry, I’m old , it is late and your last paragraph is very dense. What you are saying is that the debt of operating companies is less risky than the debt of the holdco is that right? The hold co owns the bulk if not all the shares of the operating company so I do not quite see how this works. Can I trouble you to go over your point step by step as it is not clear. Thanks again for your insights. best sc
P.S. I think what you mean is that the debt of the operating company gives access to the assets of the operating company but debt of the holdco only then goes down to the operating company. The only one who wins are the lawyers. Is that your point or is there another point.??
SC, I will be glad to explain best I know in a simple general manner (as I am no expert trust me). I may gloss over something you are more wanting addressed so ask away, and maybe I can give an answer if I know.
First most people just are confused with the entire process. Lets use ute Ameren because it is more simple (Entergy owns way more subsidiaries). Most people call Ameren, as the utility company. It really isnt just like Entergy isnt either. Ameren is just the do nothing holding company that owns all the common stock of Ameren Illinois and Ameren Missouri. Over the many decades many little common stock utilities were bought out and then folded into these two companies common stock. They actually have board of directors for each subsidiary. But guess who gets to elect them? Yes, Ameren the hold co as they own the common stock..
Now the holding company doesnt just buy out these companies they must get state regulators to approve this. Usually the hold co throws in some goodies for the community and such and it gets approved but with conditions as nobody wants their local ute going bankrupt.
Holding companies were created with purpose of using leverage. This gets complicated but leverage creates more access to capital.
Regulators dont want this leverage from the hold co seeping into the finances of the local ute too much so they typically (but not always) wall off the subsidiary from the hold co leverage.
So for everything to work there will be debt at the subsidiary level and at the hold co level. Typically subsidiary debt is safer, higher quality debt because regulators will not allow a utility to become over leveraged. And since hold co has more debt regulators will ring fence sub. so hold co cant rape it financially for its other goals or debts. Keep in mind over time eventually that hold co needs the income and cash generated from the subsidiaries to finance all its debts. If the hold co goes bankrupt its possible the subsidiaries could be humming along just fine.. But if the subsidiaries go under the hold co is dead in the water,
I will stop there for now, and let you digest that. Feel free to question that as I may not be sequencing my thoughts properly.
SC, since you offered can I ask which of the bio tech pharmacy stocks you see as having a future after this passes? I know GILD is supposed to have a large cash reserve but its price has been going up not down. One I find interesting is NVO partly because price is in my buy range between 20 and 50 and I can buy more shares than a 100 stock. Also important is it pays a dividend
Likewise.
Just hoping that in a few weeks I won’t be saying “if I was smart on 3/19 I would’ve sold all”!!!!
Grid
Thank you again for your piece above on holdcos and operating companies. Basically what you are saying if I read you right is that state power commissions in order to agree to letting the hold co buy an operating company have put in place more stringent credit requirements than the holdco may have. The holdco agreed to get the asset approved. This makes sense. I understand this now. I have to tell you that your comments are very interesting and I and probably others her would probably encourage you in your “free time” to consider doing a short paper on the dynamics of energy comapnies.
My sense is that gass suppliers may for small investors be as interesting if not more than power firms and so should not be excluded. I’m not sure why that might be but would value your take on it.
The child’s guide suggestion stems from the fact that we are not putting all are back and forths in one place so it becomes a bit tricky to find your posts. It would be great to have the content all in one place. Just a suggestion so take it for what it cost you. very best sc
P.;S/ Grid
Am I correct that in a mortgage backed bond that should the operating company go BK, that anyone who bought the company or tried to take it out of BK would have to pay off the mortgage backed bonds before they would be allowed to operate the facilities used to collateralize the bonds? I’m not sure you actually answered this question or it got lost in the back and forth for which I apologize but if you could expand on this would value it. Many thanks SC
SC, I am going to get way over my skies here so I will stay general as to not expose my limited mental capacity… First though, before I forget, the Hold Co/subsidiary can be very complicated and not clean cut. For example I was reading an Indianapolis Power Light rate hearing and the regulators and lawyers were stating some of cross debt covenants between them were so complicated they really had no idea of the ramifications as the company is only partially ring fenced. And to complicate matters Indianapolis Power is actually owned by IPALCO Industries which is a hold co…AES bought out IPALCO…So its a hold co owning a hold co that owns a subsidiary. How do you like that. Now wonder they dont know…But during 2002 ish AES which ultimately owns IPL had a trust debt of $50 par drop to under $5 while IPWLK stayed over $70 (par $100, still trading).
As far as mortgage backed debts go I tease about taking a smoke stack home with you in bankruptcy recovery, but there isnt any absolute guarantee of 100 cents on the dollar… Though usually you get a good portion. See you also would have possible late stage bank secured credit and debtor in possession financing procedures that would come into play. So I like the security, but really what is most important to me is statistically the A2 rating means you got a 99.1% chance of no bankruptcy for four years out.
I like both
and DUK-A
adding this week
cant resist
Pickle, what symbol are you using to purchase DUK-A? I’m on Fidelity platform and still cant figure out the trading symbol for it. DUK-B is dukb on Fidelity but duka remains a mystery to me at least. Thanks in advance if you can shed any light.
It would be DUKPRA on Fidelity.
Fidelity typically uses this naming convention for most preferreds – basically put PR where the – is
Thank you! Won’t let me pull up a chart using that symbol but works for order placement. Many thanks again.
For those following RLJ-A. Common dividend cut to one cent. Preferred dividend maintained. With no near term debt maturities and (at last check) $900 million in cash on the balance sheet, I don’t think the cumulative preferred dividend is in jeopardy.
Thanks Retired
Preface, this is in no way an attack on RLJ-A at all. Im just adding obvious color that newer people may not know…..When companies in times of stress and need to preserve cash, the instant common dividend suspension is telling you they need to preserve cash. If they need cash or need to preserve more (and I have zero idea if that is going to be needed) remember the next step is suspending the dividend.
As credit dries up and becomes more expensive, it makes “math sense” to suspend a preferred dividend (for any company not just RLJ-A) and owe that on an accruing basis than to try to tap cash somewhere else. This is not unusual, as it happened in 08-09 crisis. One doesnt have to go any further than RLJ-A when it was in its original form as a Felcor preferred (RLJ bought them out a few years ago). The then Felcor preferred suspended that dividend, but the good news was eventually it was paid it back in full a few years later.
Thanks for your opinion Grid.
Of course i respect Gridbird and his comments. Specifically on RLJ-A: preferred is just too cheap. I have purchased an oversized position here under 12.
Time will tell!
Retired, Trust me, I am in no disagreement with your thesis. I was just explaining the process. I suspect you know infinity better than I do on how much money one can make in these times of volatility.
Steel trap focused minds with understanding of the finances and strong nerves can make a lot of money here. If I own a ute and it drops I stay sane knowing it will pay.
If I bought a higher risk issue at say $12 and it went to $8 I would probably panic and sell, and a few months later the ones who also bought at $12 and had the nerves would double their money down the road. 🙂
Well, Gridbird, I bow to your superior call. I was obviously wrong. But I’m going to hold my position.
Off to have a stiff drink…
Retired, I know nothing either…Join the no nothing club with me, always another seat here! ..Some of these market dislocations are crazy…Spire is down 1.13% as I type the past 5 days. The superior stack preferred is down 27%. The common stock is always ultimately in more peril first and yet it has been relatively stable past 5 days. Ok, Im pissed, but not worried.
SJI is up 2% past 5 days and its baby bond which is superior stack is down 42% in 5 days. The wrong people are selling in my book. The bond cant be in peril and the common be all fine and dandy.
Can they “call” the RLJ-A? I’m not sure how this works with convertibles.
RLJ cuts common dividend to $0.01 and declares preferred dividend
That’s good news for RLJ-A holders.
There’s another selloff on SR-A now, I had a bid fill at $22.50 and the price is still at about $23.
That ain’t nothing…. Take a look at BSA! Baa2/BBB- 5.125 due 8/1/2031 and it dropped 29% to as low as 14.91…. I own it and couldn’t stand it anymore, so I bot a token 100 shares @ 15.13. At 15.13, this investment grade unsecured and unsubordinated obligation yields 11.50%. Rating confirmed at Moody’s (says stable) but S&P site seems to be down right now so can’t confirm the BBB-.
Oh, yes, I see you’re right on that. I’d buy some too but I already have a full bucket of BSA that I got around $20 during the Dec. ’18 selloff. Might still get a little more though……..
Gaslog Partners A-B-C preferreds did not make the March 16, dividend payment. Does anyone know if they will be paying anytime soon?
Jeff,
Didn’t see anything reported. Maybe your broker is just slow to post due to all the activity going on…. You could try emailing their investor relations dept.
A4I–I spoke with Schwab this morning and they haven’t gotten the money. Tried calling investor relations and nobody is there all day.
They have always paid on time for the 5 years I have owned these stocks.
Jeff O, I’m with Fidelity and receive the GLOP-C dividend in my account today. Others with Fidelity and TD have posted that they received the GLOP-B and GLOP-C dividend in their accounts today as well. I hope this helps.
ISG is being called.
The 6.125% Securities (CUSIP 456837509 / NYSE: ISG) and 6.000% Securities (CUSIP 456837AE3) will each be redeemed in full in accordance with their terms, with payment to be made on 15 April 2020 and 16 April 2020, respectively.
https://finance.yahoo.com/news/ing-redeem-two-series-perpetual-220000160.html
that’s strange because it’s down to 24.46 today… did the reverse the call?
INBKL – INBKL is being offered at $22 right now…. It’s a subordinated note paying 6%, will float on 9/30/2021 @ 3 mth LIBOR + 4.85%, has a floor at 4.85% and a maturity of 9/30/2026. Calculated YTM @ $22 using 4.85% as the fixed rate this baby bond yield to maturity = 7.11%. If I figured correctly, using a blended coupon of 6.00% to 9/30/21 and 4.85% to maturity after that (the worst case possibility barring default), you get a 5.11% average coupon and an actual minimum YTM of 7.40%. Cheap????
Thanks 2WR! I just picked some up at $22.00.
Similar to how much other bank preferrreds have fallen. So the question becomes which banks are safest?
Good question, Martin. WFC is still in the doghouse from years ago. So I would rate them and COF, 2 of the least strongest amongst the likes of JPM, BAC, GS, or C. Citi can’t get a nice IG rating to save its life. It’s still the red headed stepchild. Looking at my pfd’s, BAC and JPM at 6.00% are holding up very, very well with plenty of call protection. Barely dipped below par, unlike many others.
DXB (Deutsche Bank Contingent Capital Trust II, 6.55% TPS) closed down at $24.21 on Monday. DB announced last week it’s being called for redemption on May 26th. Ordinarily that would be trading at par + accrued, but these are challenging times..
I should note that it wasn’t a formal redemption notice, just an announcement of intent to redeem. That’s certainly a factor here too, as that gives them the legal ability to cancel the planned redemption. I can’t seem to find my original comment here from last week, but here’s the link again announcing the planned redemption: https://www.db.com/newsroom_news/2020/deutsche-bank-announces-decision-to-redeem-trust-preferred-securities-and-not-to-call-additional-tier-1-notes-en-11502.htm
Tim,
In the past you shorted SPY with SDS or SH (can’t remember which).
How about buying now some insurance in case of further drops (if only as a psychological measure)?
dan—it is SDS. I have a tiny amount now and have had some off and on during the last fews weeks. I wish I would have had some on the close Friday. Probably for the 1st time ever it has been very profitable. I don’t write about it as folks follow me and I don’t want them to as in normal times it is a loser. A few hundred shares goes along way–the most I have ever owned is 1000 shares. Today the shares are up over $5/share. In the last couple weeks I have started with a couple hundred on a big up move and add a few times–then I leg out on the down days. You don’t want to hold these on the day the market moves 2000 points higher 3 days in a row–now that is painful and because SDS is a 2x leverage money goes up in smoke quick.
Tim, I Also use sds as a hedge. I would not advise to own it now with the Vix above 80. The all time intra day high was 89 back in ‘08. People on SA. Thought I was crazy buying sds when the Vix was at 12-14. Ha.
It can be a loser in abnormal times too. Consider exchange and government rule changes that could happen. In late 2008, I had a mid-six figure profit eliminated when a short sale ban froze these instruments for a week (IIRC). I was lucky it didn’t turn into a loss of that magnitude.
Qniform, so true. Especially in times like this where emergency powers are invoked. Much safer to hedge with TLt or ief. ATB.
Read Comments last week on lodging investments. Here’s what I am experiencing. Checked into a large hotel near St Louis and desk clerk told me that hotel had 9 reservations last night. He was instructed to let people cancel reservations even though they were non-refundable. This doesn’t look good.
Not to scare newbees but just talking worse case possible scenerios as most dont know the pricing charts of Preferreds and ETDs from 2008-09 crisis as they are over 10 years ago and most of these issues have been redeemed..But a few things could happen that doesnt in normal environments..And I am not suggesting it will because I have no clue!
1) Lower the government yields go doesnt not mean current down side protections for income issues.
2) Credit spreads could widen even more and liquidity dry up.
3) Dumping could create more selling pressure.
4) Even high quality can be punished badly.. BGE-B was a 6.2% 2003 issued trust debt with BBB credit rating.. 08-09 crisis pushed Fed Funds to zero like it did today. Even though Baltimore Gas and Electric is a high quality ute and had no credit stress its yield got almost to 10%. So you know what kind of haircut price wise that had to get to almost 10%. And this was a higher quality issue. The more stressed issues went well under $10. So anything is possible and what looks like a deal today could be overpriced tomorrow. You have to have a plan and fortitude when things are in chaos.
Hang in there!.
Bankruptcy is what I’m afraid of. Preferred stocks can survive price swings if they stay solvent. Whatever survives I make good money long term, whatever goes kaput I lose big.
Just be thankful you arent Pendragon who says his portfolio is doing fine…Do you want this kind of fine? What a total loser, this is why I have been dogging him for a year with his trash dives…Price on left is his purchase price and right is current price…
SKT – $22—$9
PEI 5.24— 1.56
PEI-B 22- 4.45
MAC 30– 13
FEI. 11 – 5.54
XOM 84 — 38
SOHON 26 — 7
EPR. 70 — 33
WPG-I 21 – 11.70
And that is only half of it… Embarrassing yet he barks about increased income, ha.
Grid, I wish I had followed you and been more heavily weighted to Utes a few weeks ago. But as you noted, it’s not a sure thing to lurch too far in that direction right now. The delayed reaction that has hit some of the better quality eREIT and bank issues could eventually spread to the BB/BBB Ute issues.
Yes, 730 its all relative. Getting punched in the gut 5 times real hard is better than 10 times. But after the third hard one one isnt thinking about 5 being a better deal, ha.
Given Breaking that Fed slashes key interest rates to 0%, announces $700 billion QE program, and dollar-swap plan to address coronavirus panic. Thoughts for tomorrow?
Don’t be too early, Sunny FL…
https://www.newsweek.com/newt-gingrich-i-am-italy-amid-coronavirus-crisis-america-must-act-now-act-big-opinion-1492270
JMO
Thank you camroc ;-). Its well beyond my pay-grade to figure out a bottom so just placing crazy low limit orders on CEFs and Utility Notes I’ve been wanting for a long time here and there.
The market was going down no matter what the Fed did. So many events cancelled and places shuttered over the weekend. Horrible for the economy.
The beaches and out door parks are packed here all up and down A1A! Coke, beer and meat selling out like hot cakes at least at my grocery stores. People are having family barbecues and enjoying fresh air and sunshine in droves at least here. Most I’ve seen in years as I live 3 blocks from the beach. I conversed with the owner of a meat packing facility today and he hired 20 new people just last week — says he’s having one of his best quarters in a long time supplying to the grocery stores. I guess hoarding has its upsides for some industries?
Are you in Jacksonville? I heard the race was cancelled so everybody in town for the race went to the beach instead. Problem not solved, just moved.
Hi Martin. No— I’m in the Central Space Coast. Crazy crowded and local convenience stores, etc. are packed, not just with hoarders. Spending at restaurants has shifted to barbecuing at the beach and parks, Wendy’s and MCD lines are long, and a lot more grocery shopping to start cooking meals at home again. Lump under the carpet hasn’t gone away here at least, it’s just moved. This quasi “Forever Summer” Spring Break may be here for a while with all the kids “out of school”. Again, this is just what I’m seeing in my neck of the woods. Than again, I live in hurricane central (we regularly get hit) so maybe people are just disaster hardened and plucky around here.
We’re nieghbors! I live in Viera. Haven’t seen crowds but then I haven’t been beachside. Stores here are understaffed and undersupplied but not particularly crowded any more.
Yes living through all those hurricane threats makes us less panicky. Unless it’s cold then Floridians cant handle it.
Lol! So True!
SunnyFL, you mentioned stink bidding CEFs. Remember leverage – they are forced sellers to maintain statutory ratios and it’s a negative feedback loop. When they say don’t try to catch falling knives, it’s more a rule than the standard advice on these. BTW, my in-laws are in Pt. St. Lucie.
governor of Calif. has stopped short of making it a state mandate ( people will not collect pay) all people 65 yrs and older are to stay home. Requesting all bars and wineries to close and restaurants to limit business to 25 people or less to avoid crowding.
The new gig economy of younger people working as independent contractors will not have a employer to support them especially for health insurance.
The feds announcing zero rates and encouraging banks to lend isn’t going to help if no one is working.
My daughter is a event manager and has had events cancelling and told to postpone booking new events to end of April.
She is scared how she is going to pay rent, bills and what happens to her health insurance
When the Fed comes up with a vaccine then I will sit up and take notice.
Economically, my sense is we are far from a bottom. You can’t even see the bottom yet. Until there is a vaccine or COVID is in retreat I don’t see a bottom forming. Once earnings seasons rolls around it’s going to astound.
I don’t know how to play this market. I had been buying “bargains” but accumulating some cash seems to be a good thing to do for now. Given that we’ve cancelled travel plans that should be somewhat easier.
Thinking to cut out the wine clubs and stockpile sanitizer.
My wife heard with them shutting down the tasting rooms people running to the store to stock up. Gives me a reason to break into the cellar and drink some of the older vintages. Still not regretting purchases made last week, but will stand back to see where it going these coming weeks.
Federal Reserve just slashed rates to 0% and have restarted QE. Was just announced according to Yahoo Finance.
The central bank said it will use its “full range of tools” to battle the economic impacts of the novel coronavirus and announced quantitative easing in the form of at least $700 billion of asset purchases. It also encouraged banks to provide credit to the economy by eliminating reserve requirements and allowing the financial firms to tap into capital and liquidity buffers.
The Fed also resumed the crisis-era policy of large-scale asset purchases by committing to Treasury purchases of at least $500 billion and agency mortgage-backed securities of at least $20 billion “over coming months.”
The central bank was scheduled to hold a Federal Open Market Committee meeting on March 17-18 with a policy announcement on March 18. In the face of accelerating cases of the coronavirus around the world, the Fed pulled the decision forward.
The decision was voted on by all members of the FOMC with the exception of Cleveland Fed President Loretta Mester, who supported all the actions but preferred only a 50 basis point cut to a target range of between 0.5% and 0.75%.
Fed just dropped to zero. Also: “The central bank will beef up its purchases of U.S. Treasurys by $500 billion over the coming months, along with another $200 billion of mortgage-backed securities.”
This may be more speculative, but seems like a good trade. PBI.B is a $25 par baby bond from Pitney Bowes. Got hammered down to $10 on panic selling, or .40 on dollar of par. Sr Unsecured. Ba2/BB+. Now $12 or under .50 on the dollar of par.
“Big” PBI bonds (not exchange traded, several issues) are consistently in 80-90 range, right now. I suspect this is a “right” price versus retail people getting blown out on the baby bond. PBI.B was almost $22 or .88 on the dollar at the end of February (three weeks ago), which is emblematic of panic selling.
Pitney Bowes is in trouble and with the long maturity date, it is unlikely that the principal of that bond will ever be paid by anyone other than a bankruptcy court.
could it be like RAIT, where the bondholders got paid in full and some made off like bandits?
Yes, but it could easily go the other way
picked up some bac-c just under par today.
MFO trading below $24.. wasn’t this called ?
Not officially, no. They said they intended to
what’s the likelihood they will call it?
Doesn’t seem to matter to the market if they did or didn’t right now….. AS someone posted yesterday, they did call DXB yesterday for example. It’ll be called 5/26 for $25.00 plus accrued of .40938 for a total of 25.40938, yet today it’s traded down to 24.52 and at 24.62 the YTC was over 17%. Right now it’s still at 24.88 with about 10 cents already accrued…. The only risk is if Deutsche Bank is still in business 2 months from now….
Which brings up a question about which I’m ignorant. If a company has the funds to call (assuming they’re not just selling lower cost debt to finance the call, which many couldn’t do now), why not just buy back the preferreds or baby bonds on the open market? Better for the company? And keeps a floor of sorts on the price? MFO as an example? Or CORR-A. They announced they were planning to redeem. Certainly couldn’t get anything for a new preferred now, but if they were planning on using cash to redeem, they could buy it back for a lot less, (and I wouldn’t be seeing such huge (paper) losses).
Any clarification appreciated.
Good question, CR… Add RILYZ to that list and perhaps CUBI-C… As long as there hasn’t been an official call notice published but they have announced an intention to call, I would theorize that they could use funds to purchase instead of call, but I’m not sure…. RILY put in the Use of Proceeds section of its issuance of RILYM that they planned to use 20% or proceeds to partially call RILYZ on its first available call date 5/31/20. That would mean something like 22% of the outstanding RILYZ. That doesn’t obligate them to call nor do I think it even obligates them to use the proceeds as intended, but if they’ve set them aside for the purpose, I would bet they could purchase instead of call if they chose to do either… On CUBI-C, it’s the first of their preferreds to be callable. They’ve consistently mentioned a desire to retire all their preferreds as they become callable to save shareholders 45cents / share in divvy payments. Who knows if they’d follow thru now given this upheaval but if their goal is to have 45cent/share flow to common shareholders over the course between 6/15/20 and 12/15/21 when the last of their preferreds becomes callable, then you’d think they’d do even better were they to purchase at a discount than to call when they can.
Somebody just blew out 3K shares of CoBank CBKPP at $80
Those that do not hold PSA-x issues may want to take a look. All trade BBB+ with coupons ranging from 4.70% to 5.60%. No QDI. Recently bid up to YTCs in the 2% and 3%s, most YTCs are now over 5%. Keep in mind PSA does good business during recessions and the common has a very low (one of the lowest) beta relative to the S&P.
Added to AGO-F at $24.70. Past call, Notes (not QDI), A-paper, 5.60% coupon below “par”
ENO $24.47 guess I wasn’t done after all lol.
Added sock drawer issue NRUC at 25.18. Subordinated note (not QDI), BBB+, 5.5%, call protected to 5/15/2024
The plunge is really creating some good buying opportunities IMHO. Bought a position in 6.5% Argo Group (investment grade rating by Standard and Poors) Sr. notes (symbol ARGD) at par earlier today:
https://imgur.com/a/PPrNtll
Dynex Capital preferred DX-A sold off 3 days before the full call on 3/14.
Final payout $25.34826.
Last trade $25.25, but traded down to $25.115
DX-B is selling for $23.99 and it is the middle of a partial call.
Added a little 2 days ago (premature evaluation?) thinking I’d get an immediate bump from some of it and the rest was worth it. Wondering at what point Fido would split them, (like my older holdings), or whether they can somehow only trade in the un-called shares??? Still haven’t split, so far.
Why, on no news, is SOHO, SOHON & SOHOO getting whacked so severely. Yes- hotels, but 20 to > 40%??
ALL-H trading below par with ex date approx 3/27
Energy related bond market looking pretty wonky this morning. Check it out if you trade bonds. Somebody is losing a lot of money.
Berkshire Hathway issues 1 Billion dollars of Euro notes at 0%
https://www.sec.gov/Archives/edgar/data/1067983/000119312520064645/d853116d424b5.htm
Deutsche Bank today announced its decision to redeem the USD 800 million 6.55% Trust Preferred Securities of Deutsche Bank Contingent Capital Trust II (ticker symbol DXB) on 26 May 2020.
https://www.db.com/newsroom_news/2020/deutsche-bank-announces-decision-to-redeem-trust-preferred-securities-and-not-to-call-additional-tier-1-notes-en-11502.htm
A sign of the times: Florida Power and LIght has registered a new floating rate note that will pay 3 month LIBOR ** minus ** 0.3%. https://www.sec.gov/Archives/edgar/data/37634/000110465920030491/tm2011915-1_424b5.htm
I already give FPL money every month. Now you can all join me.
I live and work in Jax these days. Maybe I should buy a pony and start a delivery service? Part time of course . . . hang out in the saloon later. Hmmm, nobody else at the bar. “Barkeep! Get me a Corona!”
NLY-D @ 24.80. I gave this one up for dead last year but they never finished calling it.
15% YTM. Of course there’s a catch.
The old PFX now delisted but available with a phone call as 71902E208 is a baby bond maturing in 2032. It’s trading actively in the $15 dollar range.
The parent is a private company and very little information is available. The best indicator of credit quality is the Best rating of B+ negative watch. Even with the rating, you’re flying pretty blind as the issue is the obligation of a sub, not the rated parent.
If you do have an interest, don’t just ask your bond desk for a quote. You will get ripped off. Say something like, “I’m interested in 500 71902E208 at 15 or better. Can you get me that price?”
I own 500 and but for the neg watch I would probably add at this price. The neg is fairly new and the result of a recent acquisition. I would like to see the balance sheet improve to a full B+ before I add.
No, Rida didn’t put me up to this.
Well, some areas of our government are still awake. I had forgotten we were selling the Strategic Petroleum Reserve.
http://www.worldoil.com/news/2020/3/10/us-suspends-sale-from-strategic-petroleum-reserve-on-price-dive
Might the OPEC countries believe that we are driving down the price of oil with our policy to sell these assets? Might they believe the US is flooding the market? Long term is this a smart thing to do particularly at current oil prices?
Given the decades of building this up, on the surface, is selling below $50 smart? Would love to know how much we paid to bulild this reserve.
OCSLL – I don’t get it….. on 2/13 OCSL announced they’re calling all OCSLL on 3/13. That should mean that it’s gone on 3/13 for $25.00 plus .178 accrued at least, and yet today, it’s sold down to $25… For some reason, it’s never been picked up at quantum as being called nor at Fidelity or TDA. What am I missing???? here’s the notice https://www.sec.gov/Archives/edgar/data/1414932/000119312520035566/d853099dn23c2.htm
Thought it strange as well, poked around and found this (odd to me) sounding language in the 2/13 press release:
The Notes should be presented and surrendered by mail or by hand at DB Services Americas, Inc., MS: JCK01-0218, 5022 Gate Parkway, Suite 200, Jacksonville, FL 32256.
Maybe this is boilerplate?
https://investors.oaktreespecialtylending.com/news-releases/news-release-details/oaktree-specialty-lending-corporation-redeem-6125-notes-due-2028
Ken – I hope that’s boilerplate too but I do not know for sure…. I did get confirm from IR that call does happen 3/13 and proceeds should total 25.178 approx. I’d hate to have the process of payment being screwed up by hand delivery or pony express requirements…..
GRX-A halted for trade but not GRX-B. I guess A series is being called even though B series has the higher interest rate. The logic must be first in first out.
The Gabelli Healthcare & Wellness Trust’s board of trustees authorized the redemption of all outstanding 5.76% series A cumulative preferred shares.
The shares will be redeemed at $25.0520 apiece on April 9.
As of the redemption date, the shares will no longer be deemed outstanding.
I have 11 shares from a partial fill in 2016. Looks like I lose ten bucks. Actually I’m glad to clear it from my list.
NHL to suspend regular season (Bloomberg)
NRZ CC
NRZ just concluded a CC on the status of the mriet market and their own position. This was really interesting call with much insight. MN is a very smart guy and well worth listening to. Encourage all interested in mriets to catch the reply if they did not listen to the call. SC
After the call they sold again. I’m losing my patience with pref.
HMLP up 10%, pref down 10%. And many other companies with similar absurd moves. Nobody wants debt. I thought it’s a temporary thing due to some fund/etf selling or margin call but today a nice rebound in equities and no follow-up by preferreds. Better switch to stocks then.
Cincinnati Bell Inc. CBB, said Friday it has reached agreement to be acquired by Macquarie Infrastructure Partners in an all-cash deal valued at about $2.9 billion. Under the terms of the deal, Macquarie will pay $15.50 for each Cincinnati Bell share, equal to a 101% premium to the closing per share price of $7.72 on December 20, 2019, the last trading day before the announcement of Cincinnati Bell’s original merger agreement with Brookfield Infrastructure BIP, That deal was derailed when Macquarie came forward with a bid that the company deemed superior. Funds managed by private equity firm Ares Management Corporation ARES, have agreed to provide equity financing for the transaction. Cincinnati Bell has paid $24.8 million to Brookfield in a breakup fee. The deal is expected to close in the first half of 2021. Cincinnati Bell shares rose 3% in early trade.
Glad I sold me CBB-B almost $4 ago, just the other day…right near par. Got out while the getting was really good!
Trump to declare national emergency over coronavirus (Bloomberg)
Tim
while the focus on your site is preferred and bobby bond issues, I would like to raise another related issue. Today most of the issues we are looking at yield between say 4.5 and 6% if we are lucky and most cluster around 5%. If you go above 6% the quality of the issue is probably low.IAt the same time many munie cefs are offering tax free yields of say 4.3 to 4.8% and at times more than 5%.This while many of the Nouvenand and Blackrock offerings are selling well below NAV. Even some of the PIMCO Munies are marginally below nav at times. This includes PML, PNI and PMF. While the upside may be less than certain preferreds, how do you assess the relative risk between these two categories.? Put slightly differently, at this time cef Munie offerings from blackrock and Nouven seem very attractive in fact possibly more attractive than the preferreds. Am I missing something or would it be wise to devote some energy to this category of debt. We can not be experts in everything so it may be a choice. Since I live in a high tax state, the munies are especially attractive. Would value your take on the issue as well as that of others. I guess in retrospect the answer may be in allocation i.e. what percent to allocate to preferred issues and what percent to Munies. In all events would value your inputs. TIA SC
FINRA shows the LTS issues have transitioned to OTC
I’ve had a standing open order at TDA – low ball bid – on SLMNP. The order is expiring near the end of the month. I was going to extend the expiration date, but the order got rejected. I tried to enter a new order – rejected.
“Opening transactions for this security are not accepted.” This is what TDA is telling me. Is this some of that hand holding that some other brokerages are doing? Why didn’t they tell me I can’t buy CEQP-? That seems way riskier… 🙂
Fidelity is famous for this. One has to call the bond desk to trade floating rate preferreds.
But I just checked…no problem with entering an order for SLMNP, so it is just an issue at TDA.
Not sure why TD is not allowing you to put a bid for SLMNP. I purchased small lots of SLMNP in May and October of 2019 and again in January of this year. I wonder if this is related to the upcoming merger with Schwab
Girdbird
In your view is PPL still a utility to go to. Strange that it is still selling not far from par today. Would value your take. Understand that you were in the past quite comfortable with PPL. TIA SC
SX, yes, I was in PPX pretty good past year or two buying on dips and selling on spikes. Limited cash is my main reason. To be honest it has settled in a bit above par and interest payment is still a month away. And to be honest I took advantage of sell off recently to root into issues that have call protection such as SR-A, ETI-, DTY, and NRUC when they tanked recently.
If I stayed in PPX and they redeem it in a few months, I would have lost out most likely on opportunity to dig in at good prices on other issues. Plus I also still have a few past call issues already such as IPLDP. So I really wanted to get some call protection, because when things settle down it will be too late, and some have already bounced back.
But if you are looking for that more anchoring effect type issue and risk the call along with having to buy something else it definitely is a nice issue to hold. You may want to peruse the higher quality baby bond list and see if anything of good quality that has some duration protection is still available if they are a company you are comfortable holding.
Grid
thank you for your constructive suggestion. With regard to PPL do you have any concern with their large U.K. holding and how that might impact on the stock?Am looking for higher quality issues but it is a slow process. Thanks again for all your insights here. SC
Hey, SC, I will PM you on SA later tonight… As far PPL and GB goes, they have been historically considerably more profitable in terms of net and percentage of revenue in GB than their US operations. Regulators are looking to prune that a bit in next regulatory cycle though. I make no guess on the common, but the debt is fine no matter what Regulators decide or if they decide to split operations up. It wouldnt be an issue for me. If it had a 2024 first call date at this price I would be rooting in pretty good. But of course it wouldnt be at this price if is was, ha.
TNP-C is planned for call in October per CEO on conference call (they just called the B). There’s a 25% rate penalty if they don’t. They supposedly have the cash now. Trading ~$23.50. Do you feel lucky?
Q,
I own it albeit at a higher price so, yes.
TNP-C popped up like a cork today, right back to par. This has been my largest holding since Q4 2018 and I have been quite satisfied with its performance. I’ll keep holding until they redeem it, most likely in October.
For those diversifying with below “par” lower coupons: Just picked up past call AEB at $23.57. BBB and QDI.
AEFC looks even better.
3:20pm PST: Oil at $30 as Saudis launch their offensive. Dow futures: -968.
Buckle up.
Wanna take a bet where oil stocks and MLPs are going Monday? Ouch…
Veteran oil trader Mark Fisher tells CNBC’s Scott Wapner that oil is indicated to open below $32 per barrel – nearly $10 less than where it closed on Friday, and about $15 per barrel below where it closed on Thursday.
Remember that elasticity of demand stuff? This will be a demo.
Bob, As you know, oil has a low elasticity of demand over short and medium term. All the more interesting as the Saudis have de facto declared econ-war on Rosneft and the frackers. This has all the appearances of a war of attrition. Dark, and there will be casualties but this will be interesting to say the least.
You taking the under, Grid? 😉
If it happens I just hope it drags EPD down to where it’s never been before…
JMO
I would take the under. I hope it doesn’t destroy CEQP-
Tim, I got out of that at 9.15 when it was turning south. Balkin pipes and Chesapeake issues scared me out of it.
Smart move Grid. Oil names are under extreme pressure and it will get worse if we go into a recession. ATB.
RILYZ is trading in the 24.70s Is the market discounting the probability of this being called in May? 7.5% with a call date of 5/31/2020 Considering this has the highest coupon of all their BBs and they’ve issued more recent ones as low as 6.375% it makes no sense that RILYZ would trade below par unless there’s concern about their ability to issue new BBs at lower rates.
Down another dollar as of today. Just falling with the tide? Or, are there other concerns that I should be aware of?
If they have to issue new debt to call it and try to roll it over at a lower rate it will depend what the credit markets look like.
If the market is tight, no matter what interest rates are at they may have to offer a higher yield to coax people to part with their shekels for a preferred IOU
At some point if market gets scared enough, people will hang unto their money and the sell offer doesn’t get a buy.
We are not there yet but it could be coming.
At around 3:55 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, touched an all-time low of 0.7654%. The yield on the 30-year Treasury bond notched a record low 1.3533%.
Wall Street’s Pros Fess Up: ‘We Don’t Know What’s Going On’
https://www.bloomberg.com/news/articles/2020-03-05/wall-street-stock-pros-fess-up-we-don-t-know-what-s-going-on
Tim on the mreit preferred spot I get the below. Have you eliminated this tablSorry, the file you have requested has been deleted.
Make sure that you have the correct URL and the owner of the file hasn’t deleted it.
Get stuff done with Google Drive
Apps in Google Drive make it easy to create, sto
sc–let me check–I haven’t eliminated anything.
You’re right–it is gone. Not sure what happened unless I erased it without knowing it. I will get it back during the day today or over the weekend. Sorry, but thanks for the heads up.
tim
not a problem. The information is handy so I often check it and knew yesterday that it was gone. The problem was that it was a busy day and I did not know how to gt your attention. thanks the help and all your efforts. Take your time we will survive. best sc
RLJ-A and JCAP-B on sale. I bought more. ATB
The 10 year spiked even lower to 0.671% at 9:50 ET this morning.
AFH released YE2018 today. They’ll be doing 2019 by quarter over the next weeks. https://seekingalpha.com/filing/4868839#ATLAS2018FORM10KA_HTM_S5F17C6C3CB0B5043BB70D94B2F81928B
Note from Fidelity:
Due to the recent drop in interest rates, some Treasury Inflation-Protected Securities (TIPS) now have negative market yields. While active markets do exist for TIPS, pricing for these securities is not currently available on Fidelity.com. If you are interested in buying or selling TIPS and cannot locate an active market on Fidelity.com, please contact a Fixed Income Specialist at 800-544-5372.
TIPS not trading on Etrade either I think variation on Y2K programming panic. Nobody thought about programming negative display, lol. Confirmation bias. Deductive reasoning says we need it now.
I really must not understand TIPS at all…. I thought the appeal of TIPS was protection against inflation fears…. why would anyone be buying TIPS now to the extent of accepting negative rates? I would think the demand for TIPS would be zippo in this environment unless they’re being bought by an extraordinarily long term viewing crowd…
Add the rate of inflation. So all a negative rate means is that you’re getting less than the rate of inflation.
tim
did u delate the mretit list of preffered offerings as unable to down load it. Could you check to see if it is the site or me. tia sc
I just received the following partial call notice from Etrade on my CSWCL:
Name of Security: CAPITAL SOUTHWEST CORPORATION
PRC 25.6003000
CUSIP: 140501206
Please be advised,
The bond position you are currently holding is subject to an upcoming partial call lottery.
If your position is sold before the lottery is completed,
The account holder will be responsible for any losses due to this corporate action event.
Typically, the lottery will be completed within two business days.
Called bonds will be segregated from your original position.
CAPITAL SOUTHWEST CORPORATION
(Exact Name Of Registrant As Specified In Charter)
5400 Lyndon B. Johnson Freeway, Suite 1300
Dallas, Texas 75240
(Address of Principal Executive Offices) (Zip Code)
The undersigned hereby notifies the Securities and Exchange Commission that it intends to redeem securities of which it is the issuer, as set forth below in accordance with the requirements of Rule 23c-2 under the Investment Company Act of 1940, as amended.
(1)
Title of the class of securities of Capital Southwest Corporation (the “Company”) to be redeemed:
5.95% Notes due 2022 (CUSIP: 140501 206; NASDAQ: CSWCL) (the “Notes”).
(2)
Date on which the securities are to be redeemed:
The Notes will be redeemed on April 3, 2020.
(3)
Applicable provisions of the governing instrument pursuant to which the securities are to be redeemed:
The Notes are to be redeemed pursuant to (i) Article Eleven of the Company’s base indenture governing the Notes, dated as of October 23, 2017 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee, as amended (the “Indenture”) and (ii) Section 1.01(h) of the First Supplemental Indenture, dated as of December 15, 2017, between the Company and U.S. Bank National Association, as trustee (the “First Supplemental Indenture”).
(4)
The principal amount or number of shares and the basis upon which the securities to be redeemed are to be selected:
The Company will redeem $35,000,000 in aggregate principal amount of the $77,136,175 in aggregate principal amount of issued and outstanding Notes pursuant to the terms of the Base Indenture and the First Supplemental Indenture. Such redemption shall be effected by lot.
Thanks Coaster–good to know. May make the remainder outstanding a decent hold.
https://seekingalpha.com/pr/17800934-global-ship-lease-reports-results-for-fourth-quarter-of-2019
Global Ship Lease Reports Results for the Fourth Quarter of 2019…
NEW ISSUE: First Citizens BancShares, Inc. (FCNCA)
EXPECTED RATING: Baa3 (Moody’s)
6,000,000 shares
DRD/QDI ELIGIBLE
Thanks EarlyBird
Moody’s daily credit risk rating for FCNCA is 6 out of 10 or high-medium, where 1=best and 10=worst. Wonder what the pricing will be?
When you have a Moodys, Fitch or S&P credit ratings, I would use that.
I would use the moody’s daily analytical score when you have nothing from a credit bureau.
Wonder if FCNCA will start the wave of sub 4.5 quality preferreds. Given a half a point cut, will they insult us with a 4.25. Given the potential for ZIRP, I guess I’ll be holding any quality 4.75 and above issues til redemption.
I bought some PRIF-F which seem like a good deal right now compared to everything else available. Have a question to more experienced people – even though the 200% coverage requirement goes a long way to make it safer, since the parent is private, how do you monitor their financial condition, should it deteriorate quickly? There are no regular SEC reports to peruse…
I believe tomorrow is the day when the LTS.A shares will be redeemed for $25.00 if you chose to tender them which I did. They are getting spanked today as others have predicted they would. They are down $3.61 or 14% to 21.39. Hope no one is still holding them.
Holding them is fine as long as you tender them. Hopefully no one is buying today.
Also- You get ~25.03
How does the tender offer work. At the moment LTS-A is selling form 20.90. The conversion deadline is 3/5 at 5pm. Can a purchase be mad today for 20.90 and do the conversion tomorrow for 25.03? Sounds too good.
Yes, obviously that is too good to be true. Buyers can no longer participate in the put option.
Next decision is if or when the risk/reward is worth a buy as it drops below $20.
That’s what I’m wondering. Are these worth a play down here? Anyone do a deep dive into transaction? Getting very cheap, well below $20 now.
Also haven’t been paying attention. Are the baby bonds being delisted? Probably a much better play over the Preferred if those drop as well.
Ken, they all are being delisted.
Ken, you better have a sharp pencil, trust the numbers, and do a Watergate break in to find the accounting book the pencil shirt pocket protecting nerd has hidden somewhere…The company is private. They last year issued a 10% bond just to issue a dividend to shareholders…Think about that for a second…Moodys did and they didnt like it either..And this was before the LTS acquisition. Speaking of that, part of the money used to transact this was done with an almost 7% secured debt issue. Yes, secured…
So one can make money on it or not. But either way your going to be flying blind. This issue is doing what I have been saying for weeks. It was propped up by the put that has now expired. Just a know nothing eyeball test, it looks about positioned correctly in relation to the LTS baby bonds now. Really its your typical higher risk, higher reward type plays. And I cant help you there, because it could go either way.
Ha ok thx Grid. Probably just stay out. Take enough risk with my shippers and MLPs.
My guess is that they will stop declaring dividends on these. I sold all of mine. Had a yuuuge position in them. There are greener pastures…
Thx A4I, I’ll stick to my shippers and MLPs. Maybe. less risky than even these haha.
It will be interesting to see updated share count numbers (4.6 million issued back in 5/13) beyond tender period.
BRiley crushing it again. Special dividend, increased dividend, etc.
News Release Issued: Mar 3, 2020 (4:05pm EST)
To view this release online and get more information about B. Riley Financial visit: https://ir.brileyfin.com/2020-03-03-B-Riley-Financial-Reports-Results-for-Fourth-Quarter-and-Full-Year-2019-and-Increases-Quarterly-Dividend
B. Riley Financial Reports Results for Fourth Quarter and Full Year 2019 and Increases Quarterly Dividend
Reports revenues of $165.2 million for Q4 2019 and $652.1 million for FY 2019 with net income of $16.9 million for Q4 2019 and $81.3 million for FY 2019
Declares total quarterly cash dividend of $0.35 per common share includes increased regular dividend of $0.25 per share and special dividend of $0.10 per share
Total of $1.76 per share in dividends declared related to FY 2019 earnings
LOS ANGELES, March 3, 2020 /PRNewswire/ — B. Riley Financial, Inc. (NASDAQ:RILY) (“B. Riley” or the “Company”), a diversified provider of business advisory and financial services, today announced results for the fourth quarter and full year ended December 31, 2019.
Q4 2019 Highlights
• Revenues of $165.2 million vs. $102.0 million for Q4 2018
• Net income of $16.9 million or $0.59 per diluted share
• Adjusted EBITDA of $50.3 million vs. $11.2 million for Q4 2018
• Adjusted net income of $23.6 million or $0.83 per diluted share
FY 2019 Highlights
• Revenues of $652.1 million vs. $423.0 million for FY 2018
• Net income of $81.3 million or $2.95 per diluted share
• Adjusted EBITDA of $207.9 million vs. $89.6 million for FY 2018
• Adjusted net income of $108.3 million or $3.93 per diluted share
“Our strong quarterly performance was driven by record investment banking revenues as well as significant gains from our investment portfolio which helped more than offset a large loss in our liquidation segment. Meanwhile, our consulting, appraisal, wealth management and principal investment businesses continue to perform steadily as we pursue new opportunities to create additional value from our platform. Our recently acquired brand portfolio also contributed to our fourth quarter results and we expect this to be a more meaningful component of earnings as we look ahead,” said Bryant Riley, Chairman and Co-Chief Executive Officer, B. Riley Financial.
Riley added, “Our results demonstrate the strength of B. Riley Financial’s diversified platform and successful execution of our core strategy to create increased value while also delivering dividends to our shareholders. Over the last few years, we have meaningfully transformed our business by building and purchasing assets with steadier and more recurring revenue streams. In 2019, these recurring businesses contributed more than 50 percent of pre-tax income before corporate overhead and approximately 40 percent of adjusted EBITDA. As we look ahead to 2020, and with a full year of brand investments, we expect these percentages to grow. Additionally, we continue to view our balance sheet as a differentiator for gaining market share across all of our operating subsidiaries and as an engine for driving incremental cash flows from our more episodic capital markets and retail liquidation businesses. The platform we have created allows us to opportunistically pursue unique investment situations which helps us to deliver shareholder value in excess of our day-to-day operations.”
Q4 2019 Financial Summary
Fourth quarter 2019 revenue increased to $165.2 million from $102.0 million for the fourth quarter of 2018, despite a loss in the Auction and Liquidation segment during the quarter. Net income increased to $16.9 million, or $0.59 per diluted share, compared to a loss of $8.8 million, or $0.34 per diluted share, for the fourth quarter of 2018.
• Capital Markets: Revenues increased to $172.2 million from $60.6 million for the fourth quarter of 2018. Segment income increased to $88.6 million from a loss of $12.5 million for the fourth quarter of 2018. The significant increase was primarily driven by investment banking as well as investment gains related to the Company’s proprietary equity positions.
• Auction and Liquidation: For the fourth quarter of 2019, this segment recognized negative revenue of $44.4 million and a segment loss of $60.8 million. The negative revenue is attributed to a significant loss accrual related to a large liquidation project which is expected to be completed during 2020. The total estimated loss for this project through completion is included in fourth quarter 2019 results.
• Valuation and Appraisal: Revenues were $9.7 million compared to $11.3 million for the fourth quarter of 2018. Segment income was $2.7 million compared to $3.4 million for the same year-ago period. While the fourth quarter of 2018 represented an exceptional quarter for revenue growth in this segment, results have remained relatively steady from quarter-to-quarter and year-to-year.
• Principal Investments: Revenues increased to $23.7 million from $20.0 million for the fourth quarter of 2018. Segment income increased to $8.8 million compared to $5.7 million for the fourth quarter of 2018. Results for this segment are primarily driven by United Online and magicJack.
In October 2019, the Company acquired a majority interest in a brand investment portfolio which is focused on generating steady recurring revenue through the licensing of brand trademarks. The Company’s brand holdings contributed an additional $4.1 million in revenue and $2.7 million in operating income for the fourth quarter of 2019.
Adjusted EBITDA (1) increased to $50.3 million compared to $11.2 million for the fourth quarter of 2018.
Adjusted net income (2) increased to $23.6 million, or $0.83 per diluted share, compared to $0.7 million, or $0.03 per diluted share, for the fourth quarter of 2018.
FY 2019 Financial Summary
Full year 2019 revenue increased to $652.1 million from $423.0 million for the full year 2018. Net income increased to $81.3 million or $2.95 per diluted share from $15.5 million or $0.58 per diluted share for the full year 2018. The addition of the Company’s brand holdings in October 2019 contributed $4.1 million in revenue and $2.7 million in operating income for the year.
• Capital Markets: Revenues increased to $485.9 million from $275.1 million in the prior year. Segment income increased to $179.3 million from $10.2 million for the full year of 2018. The significant increase in results for this segment can be attributed to strong investment banking performance as well as gains from the Company’s investment portfolio. The addition of GlassRatner, which the Company acquired in August 2018, also contributed to results for the full year.
• Auction and Liquidation: Revenues were $22.5 million with a segment loss of $25.5 million for the full year of 2019. Results for this segment are expected to vary from quarter-to-quarter and year-to-year due to the episodic nature of the Company’s retail liquidation engagements.
• Valuation and Appraisal: Revenues increased slightly to $38.8 million from $38.7 million for the full year 2018. Segment income totaled $10.2 million compared to $11.1 million in the prior year.
• Principal Investments: Revenues increased to $100.9 million from $54.2 million in the prior year. Segment income increased to $33.2 million from $19.4 million for the full year 2018. Results for this segment were primarily driven by United Online and by magicJack which the Company acquired in November 2018.
Adjusted EBITDA (1) for the full year 2019 increased to $207.9 million compared to $89.6 million for the full year of 2018.
Adjusted net income (2) increased to $108.3 million, or $3.93 per diluted share, compared to $38.8 million, or $1.45 per diluted share, in the prior year.
As of December 31, 2019, the Company had a total cash and investment balance of $832.2 million which includes approximately $53 million in equity investments included under prepaid expenses and other assets. Net of $792.9 million in total debt, the Company had a net cash and investment balance of $39.2 million at the end of the fourth quarter.
The Company repurchased over 870,000 shares of its common stock and warrants under its share repurchase program during 2019.
B. Riley Financial stockholders’ equity increased to $360.7 million as of December 31, 2019.
Declaration of Common Stock Dividend
The Company’s Board of Directors has approved an increase in the regular quarterly dividend to $0.25 per share, up from $0.175 per share, and has also declared a one-time special quarterly dividend of $0.10 per share. A total quarterly cash dividend of $0.35 per common share will be paid on or about March 31, 2020 to stockholders of record as of March 17, 2020.
Upon payment of the fourth quarter dividend, the Company will have paid a total of $1.76 per share in dividends on its common stock related to earnings for the full year of 2019.
Good news for common stock holders. Mixed news for preferred holders. All we care about is how they can stay solvent.
Every time RILY says something like, “we continue to view our balance sheet as a differentiator for gaining market share across all of our operating subsidiaries and as an engine for driving incremental cash flows from our more episodic capital markets and retail liquidation businesses,” I keep wondering what the hell they mean…… At least baby bond holders can take solace in knowing they have enough confidence to be raising the common dividend, but their balance sheet viewed as a positive differentiator????? I don’t get it…. long RILYZ and H
CNLHP ask is currently trading under redemption of $50.50. 4.5% coupon, BBB+, QDI. If believing rates are lower for longer, might be a candidate to look at. I bought at $50.16.
Thanks for the heads-up alpha8! Entered a limit buy @50.11 and it filled at 50.00 even.
Nice fill Mikeo. About a 1/3 through accrual so you’re well under 50.
Alpha you may not be aware of this. CNLHP is a 4.5% preferred issued when 10 year was 3.83%. Yes, 3.83%…The market doesnt owe us anything. Amazing huh?
Of course a caveat is Federal taxes were higher then also.
Gridbird, i put in an order today to sell 400 shares of AILLL at 28.85. Only 1 share got sold at 28.84 (never seen that happen before) did you work your magic and rip me off for a penny.
Ha, I wish Libero. Unfortunately I am out right now. I am pretty strict to buy in low 27s and sell around 28. It may be awhile before I can get back in.
In fact EP-C probably is my only issue I own that is above par and callable now I think.
libero, I was able to sell a partial amount at $29.04; 61 shares out of 300 offered .
On Level II I saw trades at $29.04 going off before & after my trade, for far more than 300 shares, yet I got only a partial fill. Go figure.
I might buy back if it goes below $28.40 or thereabouts.
Grid, Therefore – the credit spread was 0.67% at IPO back in 1963 and touched 3.54% today. wow. 4.50% QDI never looked so good! lol
And who would have agreed to sell all holdings back in January and dump into UST10 when it yielded circa 2%? Now it’s under 1%. Tidy cap gain. Grid you and MartinG need to start flipping UST10s.
Now that the Fed cut rates 1/2 point today what should we do, lock in the best rates we can find?
I am surprised the stock market went back into the red. So, I am not changing my plan. This rate cut is pure waste. Let’s see how it plays out.
Got to a 50% position in BEP/PRA (5.25%, BBB-) now at cost of $25 before the rate cut. I like renewable energy and this company, so it’s not just because it’s above market rate for an Investment grade company.
Yep but wait for the next panic over the Corona virus; I bet it wont be long.
Damn Hawaii Electric preferreds are hard to get in at a decent price due to old illiquidness. Finally got an entry point today on one of modest yield. Got 600 shares of HAWLI at $19.90 for a wealth building 4.77% yield, lol. The redemption price is $21 so that is good. They have been callable since before I was born so I see no concerns there though.
QOL shows a weird one. AYTU is a penny stock offering an 11% preferred AYTUP. Life sciences research, may get some coronovirus action. According to the chart common stock once sold over $2000 a share. Now it’s 54 cents.
Past call BK-C at 25.29 is trading .03 under accrued. BBB, 5.20% coupon, ex is on Wednesday
Thanks alpha8–maybe on the list for tomorrow.
Another sock-drawer candidate is AEFC w/BBB, 5.10% coupon, 12/2024 call, 5.11%YTC at 25.20, goes ex next Friday. Also good flip potential as spreads re-tighten.
Alpha8–will add to my list. I believe we are going to get a great shot at these at lower prices in the weeks ahead–pretty certain we are not by the wild trading—the traders love these moves either up or down.
Alpha and Tim,
I think next Friday is the pay date (not the ex-date) for AEFC. According to marketwatch, it went ex- on Feb 27. QOL says the quarterly pay dates are 3/15, 6/15, 9/15 and 12/15.
https://www.marketwatch.com/investing/stock/aefc
mbg
CODI-B trading under par. 7.875% FTF, locked in until 2028. Parent company had awful quarter, preferred dropped into 23s last week back up a bit. Any thoughts? Seems like a good opportunity.
MLPs of any kind regardless of fundamentals are sold like there’s no tomorrow. There are even cases where the illiquid preferred loses more than the equity. Dislocation. Unfortunately in such circumstances equities move fast but credit needs some time to catch up.
While most shipping preferreds seem to be stable or climbing this morning, ATCO’s (formerly SSW) are dropping a good bit. Any ideas? (I’m clueless)
I couldn’t give a definitive answer, but I suspect it is mostly due to the name change. Reactionary selling from people who weren’t paying attention. Possibly some don’t like Atlas either.
Thanks. My best guess, also. After selling most of my E because of neg YTC, and some of my I when it reached high 27s, I’m nibbling again.
I missed this announcement. MVCD has been partially called…..Feb. 25, 2020 — MVC Capital, Inc. (NYSE: MVC) (the “Company”), a publicly traded business development company (BDC) that makes private debt and equity investments has announced that it will partially redeem its 6.25% Senior Notes due 2022 (NYSE: MVCD) (the “Notes”). The Company will redeem $20.0 million principal amount, of the $115 million issued and outstanding Notes on March 26, 2020 (the “Redemption Date”) in accordance with the optional redemption provisions provided in the indenture governing the Notes. The redemption price per Note will be $25, plus accrued and unpaid interest through, but excluding, the Redemption Date. MVC intends to use cash on hand to fund the redemption.
David–thanks – missed that also and I hold some of it.
Yeah, Having a list of partially called/redeemed investments is a good list to have handy when the public begins to panic sell. Was good buying this one and others last week near par. Many will be redeemed in the coming year, and that was a gift for 2020.
Other lists are handy too. Like buying BK-C a couple days before x-div date on a panic sell too. Another good buy in this low interest rate environment. pinned to par, above 5%, low risk, good credit quality, …
Any thoughts on the Centurylink baby bonds (CTAA, CTBB et al) now trading under par? These reliably go on sale in times like these, and I am tempted.
I’ve been in and out of several of them this past year and made decent money. Looking at CTZ for a 9.7% YTC play that should be fairly price stable. Do your own DD.
KTBA up over 12%
On a very low volume stock it could be just one buyer driving the price up. Unfortunately I only had 50 share to sell. I would’ve sold him everything I had.
Wells Fargo to Liquidate Wells Fargo Capital X and First Union Capital II Resulting in the Cancellation of Capital Securities and Distribution of Underlying Debentures to Holders
SAN FRANCISCO–(BUSINESS WIRE)– Wells Fargo & Company (NYSE: WFC) today announced that on March 30, 2020 (the “Liquidation Date”) (i) Wells Fargo Capital X will be liquidated, the 5.95% Capital Securities (the “Wells Fargo Capital Securities”) and the 5.95% Common Securities (the “Wells Fargo Common Securities”) issued by Wells Fargo Capital X will be cancelled, and the 5.95% Capital Efficient Notes due 2086 (the “Debentures due 2086”) issued by Wells Fargo & Company and currently held by Wells Fargo Capital X will be distributed pro rata to the holders of the Wells Fargo Capital Securities and Wells Fargo Common Securities, all in accordance with the amended and restated declaration of trust and trust agreement of Wells Fargo Capital X, and (ii) First Union Capital II will be liquidated, the 7.95% Capital Securities
blah blah blah….there is more if you want to check it out
Someone recently mentioned RNR-C as a good buy.
But I just saw that it’s being redeemed.
February 25, 2020
PDF Version
PEMBROKE, Bermuda–(BUSINESS WIRE)–Feb. 25, 2020– RenaissanceRe Holdings Ltd. (NYSE:RNR) (the “Company” or “RenaissanceRe”) announced today that it has decided to call the remaining 5,000,000 of its outstanding 6.08% Series C Preference Shares (NYSE: RNRPRC; CUSIP: G7498P 30 9) (the “Series C Preference Shares”) for mandatory redemption on March 26, 2020. The redemption price will be $25.00 per Series C Preference Share, plus accrued and unpaid dividends to March 26, 2020.
All of the outstanding Series C Preference Shares will be called for redemption. On and after the redemption date, the Series C Preference Shares so redeemed will no longer be deemed to be outstanding, dividends on such Series C Preference Shares will cease to accrue, and all rights of the holders of such Series C Preference Shares will cease, except for the right to receive the redemption price, without interest thereon, upon surrender of such Series C Preference Shares.
As of today, there are 5,000,000 of the Series C Preference Shares outstanding, all of which are being called for redemption. The notice of redemption has been mailed to registered holders of the Series C Preference Shares today. Requests for additional copies of the notice of redemption and the related materials should be directed to the redemption agent, Computershare Trust Company, N.A., at 150 Royall Street, Canton, MA 02021.
PSA-W: BBB+, 5.2% coupon, past call, at $25.12 is $0.16 under accrued.
NGLS_pa now comfortably below par. Monthly payer.
This was at $27.50 in October
I think it is a good buy. Corporate bond with 3 years maturity yielding barely 4% that means financially solid and spread of preferred worth the risk.
What’s going on with the price of Silver? That’s what I’m buying this morning, though i can’t say that i understand it.
My guess is the expected decline in industrial use of it. I’m a buyer here too
Martin G – I own a pot load of silver (physical) and I am keeping it until I need a loaf of bread–hopefully that means I never need it.
Tim, How would you exchange the metal for currency (or bread)? I’ve understood the value of metals, though not how to redeem.
Tim: Art Cashin said that everyone should have enough gold to bribe the border guards. I assume silver can be a substitute.
MartinG, Coming from such a smart guy that cracked me up.
Never been an investor in metals. Where do you buy this?
I trade metals through ETFs. SLV SIVR IAU GLD. I own a small amount of physical metals for longer term hold. I bought them at jmbullion.com.
I’m a short term trader and I know more about price movement than actual value. There’s a lot I don’t know about stocks.
Martin, and other’s who are professional traders, where can one learn this skill? I was looking at day trading academy a couple month back. I also see where Nomad posted an article about online trading academy. They were being sued for bilking seniors out of their money.
Are there reputable places / classes one can take? What is the cost? I’ve been on the fence about calling DTA, but just can’t seem to get my thoughts together.
I have a physically demanding job, but I am getting ready for a foot surgery and will be essentially closing down my business for about 4 months. I was thinking, maybe, I could use some of my time to try and learn a new skill. My body is getting trashed from my job (Garage Doors) and I will need to find other sources of income once (hopefully before) I become too ‘broken’ to install and service garage doors.
One thought, Mark – many of the trading platforms (probably most) at the onlines all have the ability to switch to a live version of the platform that allows you to do trades in real time but without real money….. You might want to look into those to learn by actually doing without being at risk…. I’ve never used the platforms (I’m talking about ThinkOrSwim at Ameritrade, for example, in this matter so keep the salt shaker near at hand when consider what I’m saying
My general feel is that educators in the space are just failed traders and they’ll try to teach you strategies that are incredibly basic or no longer work anymore. (Otherwise why wouldn’t they just trade and make a much more lucrative living?) The only real way to learn is to spend lots and lots of time at the screen, trying new ideas making notes, reviewing what you did and learning from them. Over time, things will start to click. I started 10+ years ago, but it took me over a year of exclusively focusing on this line of work before I was consistently making a living wage.
the only way education/coaching/mentoring really works is if the incentives are aligned. Rather than paying fees up front, an exchange of future trading profits for example.
I never paid for a course or followed a system somebody else designed, I just discovered what worked for me. I was an investor with mixed results until I found my niche trading preferred stocks. I quit my job which I thought was a temporary break from the world of work, but then I did well enough at trading that I haven’t needed another job.
So you can’t just set out to be a full time trader, you have to find out if you are good enough to make a living. And you need a bankroll because it takes money to make money. 10% profit is a living wage for somebody with money but it’s nothing if you don’t have the capital.
I was always risk averse and spent my younger years buying CD’s. The drop in rates forced me to find other ways to invest. My style is to stack up small gains while avoiding losses as much as possible.
Thanks for the replies. My computer is too old to be able to install the think or swim feature. I guess that is where I should start. Do I need lots of RAM or good graphics capability to optimally run those types of platforms? Are some brokerages better for this than others? Do professional traders just hang out at TDA, Schwab, Vanguard, eTrade, etc, or are there other platforms for professional traders – like something I wouldn’t have access to without some sort of credentials?
Martin, you mention a bankroll. I get it. If I have $100, my ability to make money is going to be limited. But if I can double that each month, I’d have a couple hundred thousand at the end of a year! You mention 10% profit. Is that an annual, or per trade goal? What is a realistic expectation for someone to be considered “successful”? And don’t be snarky, folks, “Not losing money” isn’t they type of answer I’m seeking. 🙂
So, what’s considered a bankroll? Is $10,000 a good starting point? Do I need $100,000 for this to be a worthwhile endeavor? More? I’m not looking to live off what I make trading – at least not at the start. I’m just coming up on 50, so I have a number of years till “retirement”.
I just realized I’m on Reader Initiated Alerts. My apologies for the off topic discussion.
I would say ram is vastly more important. I bought a “gaming” pc for the specs.
I’d say “not lose money” is a pretty good metric in terms of getting to successful. Figure out what your yearly costs are, and what your bankroll is, and from there you can estimate what kind of performance you need to achieve to make it worthwhile.
Expecting to double your money is not realistic at all. You might be able to do it with a small account, gambling on far otm options, but your risk of ruin is pretty high.
Starting capital really depends on your strategy. You need 25k at least to qualify for pattern day trader status. My trading style is very capital intensive but having portfolio margin helps with that.
Platform wise, IB is the closest it gets from a retail-ish broker but again, depends on what your needs are for your strategy/trading style.
Does pattern day trader status give me access to things I would not normally have access to with regular TDA account? Do I need a separate account for day trading? Can I just trade with my normal accounts that I already have set up? Will TDA ding me at some point for too much trading activity?
Just looking over the IB website. Looks like IBKR Lite would be sufficient, at least as a starting point. If I want to get fancy, that can come later. Am I going to get superior performance / superior tools at IBKR vs. TDA?
Sorry for all the newbie questions. I’m just trying to gain enough understanding of the basic requirements to figure out if this is a path I want to go down.
You should read up on PDT and its implications.
Tools make your life easier but performance is on you.
Geez, Mark, I have a $408 (tax & shipping included) refurbished Windows 10 machine I bought from Dell Outlet. It works fine with Think or Swim. It also runs Quicken & TurboTax without any problems. I have 15 Firefox tabs open right now and am listening to jazz on You Tube. I have several other apps open, including Thunderbird mail client which automatically downloads every 10 minutes for my 3 email accounts.
You can do a lot for very little.
JMO
Mark, a few comments:
1) It is pretty difficult to replace your regular income. The industry standard number for long term planning is 4%. So for every $1 million dollars, you can take out $40k per year and not run out of money. Stated differently to achieve a $100k annual income requires $2.5 million. Not many starting investors have that much to work with.
2) Obviously it MIGHT be possible to earn more than 4%, many folks around here aim for 5% to 6% using high quality, low default risk preferreds. Broadly speaking, anything above those rates in today’s markets carries higher default risk.
3) The “trading platform” is the wrong focus IMO. You just need a web browser to do all of the trades required. You should NOT be attempting any form of day trading, like the group that just go sued by the government is pushing. There is one acceptable type that is discussed around here, “flipping”, but that is very different from day trading generally equities.
4) Absolutely, positively I would NOT use Interactive Brokers. And yes I have an account. It is infinitely easy to “fat finger” trades there, much easier than on other platforms. IB might be a good fit after you have been successful for a few years. I would NEVER recommend it to a new investor.
5) Broadly speaking, all of the large brokerage accounts are fine for starting investors. They all have different quirks, but are workable. Fidelity, Schwab, Merrill Edge and Vanguard come to mind. E*TRADE and TD Ameritrade are being bought out so it is not clear what they will look like in the future.
6) I have personally met a lot more people that have become independently wealthy in real estate than in investing in stocks. These folks typically start out buying single family homes, fixing them up, then renting them out. It is NOT an easy endeavor and clearly is not for everyone.
Good luck,
All of this is incredibly enlightening. I think there may be an issue of semantics – on my part that is. I used the word “trading” loosely. After a little reading (thanks mcg) I’m a bit smarter and have a better grasp of the lingo. I don’t intend to use margin, I don’t see myself trading in and out of securities one or multiple times a day – at least not at this point. In my reading, I think I was mostly identifying with the swing trader. But I think my understanding of the “flipping” moniker may really be more where I’m aligned.
My first foray into investing was through the Motley Fools. I learned a lot over there, especially the ‘don’t panic’ part. That, and “buy on dips”. Oh, and “don’t try and time the market”. I think, at my heart, I am a buy and hold, but I see a lot of price swings and watch a lot – everything – move on news, and other unrelated factors that have nothing to do with the quality of a company / secure-ness of a payment. I’d like to juice my returns with that movement. I need to figure out the sell side of that equation. And have the relative confidence that I’ll be able to find another re-entry.
While I didn’t do so well with the UMH-D flip as I am still holding, I took a couple more nibbles to bring down my avg. cost. (I took Tim’s reassurance in another thread…. Thanks Tim.) I can hold till it comes back and collect some dividends along the way. I guess one could expand the timeline of flipping to include months or years….
I think a blend of core holds, adding over time, and opportunistically; with some flavor mixed in of other quality issues where I can profit from price movements, but I don’t mind holding for a prolonged period if s— hits the fan, is the type of “trading” I would like to get good at. (oh, and just bought a couple pounds of silver today when the price dropped). So, having said all that…
Where I see you folks buying and flipping in the hundreds (and thousands) of shares, I’m dealing in dozens. That $100 isn’t doubling very fast…. I get that frequency and consistency over time will allow me to expand the size of my trades. I just got lucky with my timing of SPCE. Bought 75 at $10. Sold 30 when it hit $25 for breakeven and then it shot over $40 a couple days later. I had a sell in for $40 for the rest of them. Walked with $1800. Unfortunately, it was in taxable and it was all short term gains…. Lesson learned about choosing the correct account for the correct purchase. Either way though, that is the core of my question – how to spot those opportunities. Generically, that is, price movements – not SPCE specifically; I know that is an outlier. I’m looking for the tools to learn to understand the charts, get a feel for sentiment, see price movements, quantity traded at what price, bids and asks, ….. I think I’ve answered my own question. I just described the majority of people on this site. Most on here seem to be using one of the “generic” platforms and achieving what I think I am looking for.
Am I correct in that assumption – that most are using advanced platform features for most of your entry / exit theories? What other sources can I access? I see QOL mentioned frequently, otcmarkets, SA, among others. I hate registering on sites, and like paying even less, just to access content, so I have resisted so far. Are the free parts worthwhile? I paid for The Fool for several years and do feel I gained value from that. I still browse the free side, and SA, but often find the Pendy Poundings that Grid shells out unavailable to me, or I just don’t know how to navigate that site very well. Are there pay sites worth the subscription? Or is everything I’ll ever need to know right here on III?
I appreciate everything I’ve learned on here so far. Thanks everyone for your generosity and genuineness. Also, another shout out to Tim for hosting this wonderful community. Honestly, I’ve never encountered such a civil group of folks.
Well, this got a little long winded. Apologies again for being off topic. I’m not even sure I asked a real question… 🙂
Mark. For what it’s worth, IMO, QOL is infinitely worth a nominal
Voluntary yearly donation No buy sell advice, just reliable information
I don’t need fancy charts and the latest gadgets. My favorite tool is still the watchlist. But that’s me, you develop your own style. Ask 10 people and you’ll get 11 different answers.
QOL is a good resource if you trade preferred stocks, no opinions just facts. SA is thought provoking but be aware not everything is correct. Comments are a good way to gauge investor sentiment. This site is excellent but very specialized, its value depends on what kind of investing you do. Read many things and form your own opinions.
and whatever you do, don’t study “Day Trading”. Our flipping strategies get confused with day trading but it’s actually very different.
RE: IBKR.
IBKR is not a good brokerage for a newbie, I would agree. For all kinds of reasons. The things that make it very quick to use are also things that make it very easy to make mistakes.
That said, IBKR has a great paper trading capability for trying things out and getting used to the look and fell of the platform (they have both web based and stand alone platforms). Like a flight simulator. If you crash and burn you can still walk away.
Martin, I think I mirror you as close as anybody. I have trading platforms available but its not worth my time (and my time is worth nothing anymore) to mess with that stuff. I just look at my CNBC “set list” and occasionally OTC Markets, and keep one of my brokerage accounts open to punch in tickers to see what bid and ask spreads are.
And I am not trying to make a living this is just entertainment to me. But I havent been below 10% a year since 2013, so I am not complaining….But doubling my money in short order or “living off trading” is not even in the realm of reality for me.
The best I’ve done is doubling my money in 5 years. But that didn’t include any bad years. I lost money in the 2008 crash. And I barely broke even when oil prices collapsed, too much in energy and shipping. oh, I’m sure I lost in the tech crash too but I wasn’t an active trader yet.
My expenses are low. No children, mortgage paid off. Everybody’s idea of “enough to live on” is different. It’s a hobby for me too, or else I probably wouldn’t have enough interest to do well.
Grid – am I correct that you do most of your short term stuff in qualified accounts?
Bob, I try and was really good at it for years. But this past year and first two months of this year, it hasnt worked out as well, and Uncle Sam has shared in the bounty. But getting 3/4 of something is better than 100% of nothing. Take the resets, I had them in taxable and they spiked hard several months ago. I sold them all, I wasnt going to watch them drop. Uncle Sam is thanking me very much buying Canadian lol…Then I had one I bought for $100 and was offered $150. I accepted, tax man cometh again. Past year I have bought some high quality low yielders as core holds, but damn when they spike $2 quickly and you can buy similiar quality paper that didnt bounce or even sagged, I sell and buy. Unfortunately its the cost of business on some.
I think I am positioned near term to exploit tax free account but who knows. Sometimes its the ones you arent counting to spike that do and I hit the sell button. I want another 20% haircut, and I will be back poking around the CAD issues again!
MartinG, Thank you. Our hard assets have always been in real estate and I have no* experience in metals though am curious to know more about it. Will start with the names you mentioned.
*Thirty years ago my wife found a 37.5gm “puro oro” coin along an airport roadway. I look at it occasionally and put it back in the safe. Not really sure what to do with it.
alpha8:
I guess it’s a centenario (or 50 pesos oro, worth about $1500 )? If in good shape some gold stores may buy it (at a significant discount though), or you can change it to money if you travel to Mexico.
Finally I now figure out what happened to the coin I lost at that airport 30 years ago! 🙂
Thx alpha8!
dan, Exactly – a 50 peso coin in mint condition as it was found in a translucent cover. Wasn’t worth so much then but it is now. (I hear the gold people in the background “See!”)
But as you point out – seems hard to redeem at it’s full face value. Still confused about that part!
If the link below is correct, today they buy it for 35,000 pesos, about $1750, and sell it for 41,000.
https://www.banorte.com/wps/portal/banorte/Home/indicadores/metales/!ut/p/a1/04_Sj9CPykssy0xPLMnMz0vMAfGjzOLdjQwtPIydDbwtAvwMDByDfTx8fC0sDJzNTYAKIoEKnN0dPUzMfQwM_E3cjQwcLfy8TIJNLY0MPM3w6g8xheo3wAEcDQjZH64fhd8KE6gCfE4EK8DjhoLc0AiDTE9FABXIt1Y!/
Or just google “banorte centenario”
Martin, Have you ever looked at Sprott’s CEFs PHYS, PSLV, CEF? I heard there was 3rd counter party risk with ETFs so I went with a trust. Also you can get a 1 to 2% discount sometimes.
Haven’t been following them. I’d guess the performance would be similar. Readers make various comments about what happens in a meltddown and I don’t know what to believe. I use ETFs for trades because of simplicity and low overhead. For a large long term hold buying physical metals is probably the safest way to go if you can store them safely.
My experience with silver and gold from being a newbie to now. When the government minted the first gold and silver coins again in the 80’s I bought a complete set of the gold coins. I got carried away on the silver, I bought a bank box of them (500) soon realized lot of weight and too much bulk to store in a safety deposit box. I got rid of them. Lesson learned, you pay a fee to buy and a fee to sell.
Lucky I found a coin dealer who I considered a friend. He sold me 50oz Engelhard bars at 3% above spot. Lot easier to store.
Now slow motion forward 23yrs. In that time the price of Ag went no where. You lost money paying for a lock box at the bank. I would of been better off hanging around with this great group of people and investing that money.
Then in 2010 a lot of people including myself lost our jobs with a wholesale lumber company. I was out of work on and off with temp jobs for 1-1/2 yrs. Lucky at that time Ag went over 40 a oz. I sold everything I had bought at 8.50 to 12.00 a oz to pay mortgage, property taxes etc.
Moral of this story, you figure it out. But like anything there is a learning curve. No matter how much my granddaughter thinks Nintendo bowling with a mat in front of the Tv is real, I still scored better.
Again I think it was luck, the price went up at the same time I needed to sell
Silver did not follow gold when gold was shining now there’s liquidation of a bit of everything so it’s coming down. Very disappointed since silver had to be one of the investment pillars in a bearish asset allocation. It seems only Treasuries can play that role but IMO now they are really overbought.
If you look at silver’s history after 2008, it sold off in line with equities it really took years for it to recover and take off. It’s a diversifier but a pillar for the bears is not entirely accurate since silver has the industrial uses that make it trade in line with the manufacturing economy.
Silver is not for quick results. It will eventually come around but you don’t know if that is another decade!
I will apologize ahead of time….need a laugh…
what’s with silver? Lone Ranger’s hoss?
SR-A, QDI, 5.9% coupon is trading near post IPO lows. The Ba1/BBB split rating is not for me though this appears an opportunity for those OK with the Moody’s read.
Alpha, We are mind readers! I have made a buttload on this issue flipping and flipping and flipping this. First batch I loaded up at first moment IPO at $25.50 and started from there. And of course buying and selling at higher rates. Been waiting past few months for a toe in. Restarted position at $26.52 today and will look to buy more if prices sag. A lot of liquidity here being a relative new issue, so it could get sucked down with market more.
I hope it goes lower and I will buy lower. I have zero concerns of this issue. “Laclede Gas” has been around for 150 years and is my local ute. If I get the right price I will buy and buy like IPLDP and not worry.
That being said there are ton of them out there that will provide better trade profits, but lately that isnt my concern.
Large cap sub 5% coupons finally having sub $25 values…all with 5 YTC, may get more interesting if drop continues…
T-C 4.75%, 24.72
MET-F 4.75% 24.95
WFC-Z 4.75% 24.88
COF-I 5.0% 24.88
COF-J 4.8% 24.50
Curious as to whether folks think CBKPP is attractive at $107? Thanks!
PLYM is up today and a lot for past year as earnings were viewed positively again. If something crazy happens and the preferred spills would be worth considering. A 2022 first call date and 2024 penalty rate kicks in. Im an owner. I have mentioned this before and own a decent amount. Anytime a common is up today says something. Up 11% past month and 35% the past year.
These folks are a sister of STAG, it seems. Can’t argue with that yield but we have to argue against an economic slowdown being good for their business. Seems worth a taste.
A4I, Stag is safer and stronger, but I own both. If everyone gets paranoid its utes and distribution reits as people will be ordering on line and having the power on more staying at home. 🙂
If the virus hits around here, I’m staying inside and binge-watching the III site. Any other takers on that plan? 🙂
Im stuck at docs office now to assist GF with procedure she is having. Nothing SARS or Corona virus related though.
A4I, that’s what I already do! ¯\_(ツ)_/¯
Grid, our SLMNP is holding strong. Grabbed umh-d at 24, tde back to par after selling at 26., gnl-b below par again. ATB
DCP preferreds getting hammered. This is a rated issuer – only B1/B+, but still…
Credit Suisse still rates outperform, saying:
DCP guided to significant declines in capex over the next two years, expecting ~$550-$600mm of growth capex in 2020 declining to ~$150mm(or less)in 2021. We view this positively as we now expect a significant free cash flow inflection point in 2021, which should allow DCP to fund both its distribution and capex program with cash from operations. Furthermore, DCP plans to announce $100-$300mm of asset sales in 2020, which would help to further high grade the portfolio and fund capex.
Anything energy related is basically getting hammered in this scare/rout. I got out of the few minor preferred scraps like CEQP- a few days ago. Only thing I own is a big slug of EP-C I bought blended cost of 49.75 ish a couple days ago.
Somewhere there will be a play, but timing it and having the nerve will be problematic for me. Heck even quality EPD keeps getting hammered and they raise the unit payment every quarter, Im watching it. Im hiding out in safe and illiquids (except my Amtrust baby bond) for now and avoiding most of the ruckus for now.
I’m selling EPD puts. Cojones, eh?
Out of CEQP preferred? I think it’s time to add at current levels.
EQM/ETRN merger to create C corp. – Dividend whacked and some convert pref exchange. Likely this gets them to IG on their debt. This from the PR:
Dividend and Capital Allocation Policy
ETRN expects to pay a quarterly dividend of $0.15 per share beginning with the Q1 2020 dividend. EQM expects to pay a quarterly distribution of $0.3875 per common unit for all quarters prior to closing the Merger.
The new policy is designed to achieve a pro forma ETRN leverage ratio of 4.0x exiting 2021 and positive retained free cash flow, a non-GAAP supplemental financial measure, exiting 2021. Additionally, the policy will quickly deliver a strong balance sheet, creating the opportunity to return value to shareholders in several ways, including, when appropriate, through share repurchase programs and dividend increases.
Financing Plan and Liquidity
ETRN intends to retire the existing $600 million ETRN Term Loan B and, in connection with the closing of the acquisition of EQM common units, $600 million of outstanding EQM Series A Convertible Preferred Units would be repurchased by EQM. The retirement of the ETRN Term Loan B and the repurchase of the $600 million of EQM Series A Convertible Preferred Units are expected to be financed through debt transactions including borrowings under the EQM revolving credit facility. Additionally, in connection with the closing of the acquisition of EQM common units, the remaining $600 million of outstanding EQM Series A Convertible Preferred Units will be exchanged for $600 million of newly issued ETRN Series A Convertible Preferred Shares.
The existing EQM Senior Notes, EQM Term Loan A, and $3.0 billion EQM revolving credit facility will remain outstanding after the acquisition. As of December 31, 2019, there was approximately $2.4 billion of available liquidity under the EQM revolving credit facility, which provides ample liquidity to execute the financing plan for the transactions, as well as the remaining MVP capital contributions and planned capital expenditures.
Terms of the new $600 million ETRN Series A Convertible Preferred Shares include:
Quarterly cash distributions based on a 9.75% annual coupon through March 31, 2024, thereafter a floating coupon rate
Beginning April 2021, the ETRN Series A Convertible Preferred Shares will be convertible by the holders on a one-for-one basis into ETRN common shares
The ETRN Series A Convertible Preferred Shares will be priced at $19.99 per share
ALABAMA POWER CO FILES FOR POTENTIAL MIXED SHELF OFFERING; SIZE NOT DISCLOSED – SEC FILING Source text – (http://bit.ly/38XpOVV)
It’s late and I’m tired from working too much. Can anyone please help me interpret?
Tex, you just gotta wait as they havent played their hand on what they are issuing yet; they could do anything from a preferred to some level of bond subordination. Nothing to worry about…I dont own any Ameren illinois preferreds currently, but if they got redeemed every time they put that in there as a generic possibility they would have been redeemed a dozen different times by now.
Somebody may be interested in researching STAG-C. I plucked slowly 600 shares today. Right around 25.70 now, and it goes exD in 2 weeks. Its all time low including Dec. 2018 rout was $24.76. This is a solid industrial reit, and still has call protection until March 2021. Some nice meat on the bone here for this 6.875% “par” yield. I havent been able to get in this issue for a long time.
Grid, I have also been adding to STAG-C, i have 700 shares now. Also added to DUKH at 25.30 and TDA @ 25.
Libero, It is good to have this bad boy back in the fold…Been a long time, welcome home, STAG-C. :)… I keep a pretty tight ship anyways, but I past few days went lock down. I only want issues I trust and can be comfortable owning with volatility.
I like it. Quite the balance sheet. Over $2Bn common equity (almost $5 bn market cap) and this tiny $75mm preferred. Probably a sure thing to be called next year.
Libero, I just checked, I miss added. We are brothers from another mother. I actually bought 700 myself. STAG-C is checked off the box, now, as that is enough for me.
Owned STAG-C since the IPO, Grid. Like MCD, I’m ‘lovin it’. You also nibbling on some MNR-C down here or what?
The STAG common was also a major winner for me. Rung the register on that for a nice pay day.
A4I, I looked at it but preferred finally getting my shot back in Stag. I owned MNR-C a few weeks ago for a couple weeks to capture a 40-45 cent quick pre divi capture play. Then wasted 3 weeks with proceeds making maybe $50 in total trapped in rag sister UMH-D. I typically only flip MNR-C because it never moves much above here. I rode that issue from $24.80 to around $26.25 after IPO and got out. And basically never has really returned there. But I could own again. But I bought a lot of EP-C, a lot when it cratered and now I really dont have anything I want to sell in tax free now to use proceeds to buy it with. Maybe I will change my mind sometime. 🙂
Well, as long as we can keep you out of gambling in the Tesla common stock, we should be able to keep you out of trouble….at least until football season spins up anyway…
A number of REIT preferreds have moved into the Buy range. Unless there’s more pain to follow.
Nice to see IPLDP trade up into exD tomm on volume. If this thing goes bankrupt you wont see me around for a long while. I will be busy making up the losses one aluminum can at a time picked up out of area ditches.
You can host The 1st Annual I.I.I. Forum Aluminum Can Rally.
Martin, I know this. It takes a helluva lot more aluminum cans to make a $100 today than it in did in the early 1980s when I last picked them up.
Grid we’ll be getting a III group discount on metal detectors and writing comments about high-yielding stretches of beach and areas to watch for rogue waves and high tides and reminiscing about the old days when there was buried change everywhere and we didn’t know how good we had it.
Everything was good, everything was fine
Bad luck and trouble never crossed my mind
I was flyin’ high, like a bird up in the sky
Now I’ve come down, my money said bye, bye, bye
The Holmes Bros.
2WR. Speaking of losses. My daily Pendynut rant… Billionaire Leon Cooperman said this morning he has lost millions the past couple days. But legendary investor Pendynut continues to state he hasnt lost any money buying Exxon at $80 and its doing exactly as he hoped and better because of the dividend.
HDO should fire him for his ignorance. But then again maybe not, as they have pulled off the rare triple play mall reit beat down loss…They recommended CBL and got smashed, go back to well and recommend WPG and get steamrolled. Well third has to be the charm as they recently recommended PEI. Hmm, maybe not as it has been blown up also. They dont know the difference between a balance sheet and a balance beam.
I don’t know why you beat on my man, Pendy so badly….. He’s a wonderful human being with an astute mind and an eye for quality whom has never been wrong in his life…. just ask him… or try to point out to him when he doesn’t even know the specifics of an issue that make it stand out…Yup, he’s never wrong until PST writes an article for HDO on the same issue disclaiming his view and outlining everything he missed. THEN he’ll claim he had it right all along… Boy I had fun on that one – LMRKN.
Gridbird:
Yes, Stag is a solid industrial REIT. STAG-C has a current yield of 6.65% and a YTC of 5.10%. IMHO the extra yield is primarily due to the high probability of a redemption and the assumption of a substantial reinvestment risk in 12 months due to the 6.875% above market coupon. If one believes that the new issue coupon is going to creep up in the next approximately 12 months inhibiting a redemption or that it otherwise will not be redeemed, then it is a good buy.
I see it more likely than not as a 1 year CD with a 5.10% rate and an unknown reinvestment rate in 1 year. Caveat Emptor. All should due their own DD.
Dave, Basically that is where I am at. I got the yield higher like around 5.4%ish or so (already forgot, ha) because I backed out the divi that kicks out in 2 weeks, plus have a blended 25.72 price today. Doesnt really matter though. Anyhow, that was exactly my plan. I needed some cash moved into one with “severe call pressure” as an anchor going forward, and this does. And I get 5 dividends for a 12 month, 2 week hold, along with no redemption worries holding.
Im directly inline with 730Cap’s thought process. This most likely will be their last preferred and they will go the Prologis route (they are stuck with an old uncallable they cant redeem from long ago) and not issue them. They just arent putting any money in preferred cap stack or they would have by now. This issue is meaningless to their cap structure anymore.
SSWA has dumped, call is 10/10/20, ~5.4% YTC.
PSA-V trading below stripped par, ~5.32%, ex date in approximately 2 weeks, callable now.
OCSLL trading @ $25.14 with a quarterly dividend of $0.38. They announced that it will be called (e.g. see 2whiteroses comments on Feb. 13 and links thereof).
So isn’t this a free money until called? Am I missing something?
Called for 3/13. Total proceeds ~$25.17.
Thanks ken, I thought it would get the full $0.38 divi, but making 3 cents in 2 weeks out of $25 is <3%/year…. not interesting….
Dan – Keep in mind that if you have idle money sitting around in a MM and you plan to keep it there, the actual yield for OCSLL is nearer to 3.50% annualized @ 25.14, so might as well double your MM return by putting it here for 2 weeks…. there’s virtually no credit risk once a call’s been declared so as uninteresting as 3 cents and a fraction might be, it still beats MM rates by far thanks to free trades with essentially no risk.
Agree 2whiteroses, thanks for your message.
But doing some numbers: assume I really have $25,000 idle with no plans to use until OCSLL is called. I can buy 1,000 ocsll and will end up earning $30 as opposed to $15 in a good mm. So I made $15 !!!! = 2 fancy coffees without croissants…. or 1 coffee and one almond croissant….(maybe plus tip), … not very interesting.
Having said this, I would not buy any more ocsll now, nor sell the ones I already have. For $15 I like to say: “its not worthwhile to even place the order”, I rather use this time and enjoy writing this message. lol.
RILYZ 7.50% note due 2027 is trading at essentially par stripped right now. This when RILYN 6.50% note due 2026 is par bid and RILYP QDI perpetual preferred 6.875% is 25.16 bid….. I don’t understand…. even with about 20% of RILYZ slated to be called on 5/31, it’s still cheap . 7.50% YTC and YTM for 2027 maturity. It seems to be the cheapest RILY issue out right now.
How the RILYZ post showed up as from “rily” I don’t know… it was me. I must have filled something in incorrectly… sorry ’bout that.
Whatever you say, Rily… 🙂
Was looking at Tim’s list for bonds this morning and article on shaky Alpha about RILY, so put in a bid on RILYZ at 25.15 and landed 200 shares. wish I had done more
While you’re living the life of rily, I have short term money in RILYZ. As long as its yield is much higher than other RILY’s I don’t see much downside risk.
I bought DX-B for the same reason. Sold DX-C to get there.
There may be a good buy opportunity today for CNP-B, a mandatory convertible $50 preferred. Selling for slightly over $45. If you think CNP has hit its low, then you’ll collect 6 dividends (@7%) until you have to convert to the stock. Most likely you’ll get the 1.8349 per share conversion. When i do the math you end up with a nice overall return (if the stock doesn’t crater) plus if you want to hold a common, CNP pretty stable and currently yielding more than 4.7%.
The bid on SOCGM is currently $40. Grid – please sell it all! That’s a 3.75% yield going forward.
I just sold my 94 shares at 40. I don’t care how “safe” the stock is a yield of 3.75% seems nuts to me.
Smart move! If you love it, you can turn right around and buy SOCGP for just under $33.
I already own SOCGP. Somebody else just sold another 100 shares at 40. Thanks again for the heads up.
I only got 200 shares left. I sold 125 for $37, though. 🙂 I want souvenirs, Tex. It took years to get them, ha. My mistake was selling 300 at $33 for a quick $2 gain. But I did at least flip them into SOCGP and reflipped them also for an additional buck and a half I think. …But yes you are right I should.
NEWTL – There seems to be an interested buyer in the market – Bid = 26.40 but yesterday someone must have at the market-ed put in a buy that got filled at 27.74. I sold today @ 26.60 which = 1.50% YTC and 4.26% YTM. Seems high for a BDC with serious call risk.
Dont anyone go rooting around on RNR-C it just got served a redemption notice after market close. Started today at $26 and closed $25.76.
https://seekingalpha.com/pr/17790374-renaissancere-holdings-ltd-announces-redemption-of-remaining-6_08-series-c-preference-shares
With coupon payment 3/1 on RNR-C and being paid to “holders of record one day prior to the payment date as long as the shares remain in book-entry form,” (quantum) do you happen to know for sure, Grid if tomorrow is the last day to buy and be eligible for the 3/1/ coupon? It’s kind of touchy timing for this announcement without clarifying mention of the 3/1 coupon in the release.
2WR–tomorrow is the 26th–goes ex on 2/27–so yes you can buy tomorrow. Pay date is 3/2 (Monday)
Thanks, Tim… wasn’t absolutely certain of an exactly defined ex date…
Glad Tim mentioned that as I assumed you knew the exD. So I see two scenarios. Buy tomorrow get the divi and accrued and lose money. Or buy after exD and lose more, lol..Of course price action will figure all that in. Unless if cratered well under divi amount, I wouldnt play this game.
OK, this may seem like a stupid question, but…many years ago I bought something (on Fido) the day before ex-d, and was unhappy to learn that I did NOT get the dividend, as settlement/record day (for Fido) was 2 days later (or that’s what they told me).
Currently, I think (but don’t know) that brokers are required to “settle”/record 1 day after a sale. Right, or not? Further, most securities (at least pref/baby bonds described on QOL) say that ex date is 1 day before the record date, which means one should be able to purchase 1 day before ex-d day and still get the divi. Right, or not?
For me, it means I’ve avoided purchasing anything within 2 days of ex-d for years, as I don’t want to be on the wrong end of a flip. Help?
If you buy the day before ex-div date you get the dividend. Settlement day is irrelevant. Record day is typically 2 days after ex-div not 1. Brokers data is sometimes inaccurate for small issues, and that would be my best guess what went wrong if it wasn’t the 1 day/2 day confusion.
2WR, This is how I interpret…right or wrong..
The redemption price will be $25.00 per Series C Preference Share, plus accrued and unpaid dividends to March 26, 2020.
…The pay date is March 2. A very quick turn around for a QDI. That is when new cycle begins..The fact they added..”plus accrued”, would mean you would get additional dividend payment up through the day before redemption date.
Do you agree with that?
Sure, Grid. The total you’d receive if you bot tomorrow, the day before x div date, would be 25.38 PLUS accrued if held to 3/25. That accrued should be no less than an additional .1013 depending on accuracy of daily accrual number (.00422) and number of days used in calculation… I figure 24 days.
Been waiting for this shoe to drop for some time.
Bermudian insurers a little slow on the trigger but not brain dead.
A subsidiary of utility operator NiSource Inc has agreed to plead guilty to charges stemming from an investigation into catastrophic gas explosions in three Massachusetts communities in 2018, the U.S. Justice Department said on Wednesday. Reuters
NRUC: BBB+, 5.50% coupon, 5/1/5/2024 call date. Not excited about the 3.47% YTC though big seller last two days, picked up as a trade though also holdable.
alpha8–it is a sleep well issue.
Alpha, Did a cane and wheelchair come with that purchase too? 😂
You know I am just teasing since I bought a bunch of EP-C and and a few hundy more of IPLDP also today.
Grid, For that particular bag of loot it was either high-quality NRUC or invest in one of those metal detectors and search for coins on the beach. Picked them up at 26.86 today. Have a full sled of IPLDP and sold EP-C at 51.80 last ten days or so and you can probably guess my current bid within a penny. Also picked up PSA-X (x-date in 2 weeks) under redemption plus accrued and wagering they’ll be distracted for a bit by higher past-call coupon PSA-V. Added a slug of RLJ-A.
Of interest: PSA itself thrives during recessions and is highly un-correlated with the S&P 500.
It’s overpriced IMO. I own about of 1/2 of my standard position but my average price is below of $26. I will be buyer if it falls somewhere to 26-26.30.
The same goes and for CHS issues, I believe it’s a great company but still expensive.
JMO
Yuriy I have to agree with you in part, but if owned at it’s recent 28.00 I’d have sold it. But if I owned it at 28.00 and considered it a hold, then I would see 26.84 as a relative bargain. A high-quality haven for now.
mfa-c incoming
No mention of redeeming MFA-B or MFO
They are explicitly mentioned:
https://www.sec.gov/Archives/edgar/data/1055160/000119312520047425/d829118d424b5.htm#suprom829118_6
This is making me a little more concerned about CMO-E and ANH-C
My error
It seem I had been way too early by selling MFO almost 2 years ago. SIlly not to have redeemed it last year already. They have been sleeping.
New Issue
MFA Financial
Fixed/Float Preferred
Security: Series C Fixed-to-Floating Rate
Cumulative Redeemable Preferred Stock
Size: (4mm $25 par shares)
Ratings: non-rated
6.50-6.625%
merci buckets
Hearing…
$275mm MFA pfd C priced @ 6.50%
Thanks EarlyBird
Thanks mcg
I have been noticing some recent activity in CRLKP. I hope it is no one here thinking they found a bargain. SEC filings from this multi times bought out trust convertible preferred (no longer convertible) new parent SP show the payout to be $19.18 at maturity.
Some may want to take a look at USB-O. It’s trading around $25.30 today.
Hi Tex, Since it’s past due, isn’t it high likelihood that USB would release new 4.75% and call USB-O any day now?
That’s a fair point but I’m not sure that 5.15% vs. 4.75% is a big enough spread to warrant reissuing. I could be wrong and I’m interested to see what others think.
Even if it is called, the downside risk seems low around $25.30. It seems similar to IPLDP.
If there is an fed cut as many are predicting, for sure 4.5% investment grade bank issues are now a sure possibility. I don’t know what the expenses are for issuing but I would imagine if USB did not issue more debt for 4.7/4.75 when they had ample opportunity to do so, they would wait at least for one cut.
RE: USB-O
By all rights USB-O should be a gonner. USB-M is trading at a YTC of under 2%, which is very telling.
I wouldn’t even assume a preferred replacement if the O is called.
Bob, any idea why USB-H is tanking? Unless rates do a 180 and rise A LOT, it’s basically a fixed rate uncallable perpetual
730 – the min rate on USB-H is “live”, meaning it’s active. At 22.11 it’s a 4% yield min rate uncallable perp. If you’re happy with those terms be a buyer.
Volume is way up so clearly there is a seller out there.
I think that’s what I just said lol.
One would think an A-rated uncallable perp would be solid in this environment. . .
I’m not a huge fan of a USB 4% yield when you can get a 5% yield from WFC-O or N. Yeah, if preferreds rocket higher beyond 52 week highs, eventually there would be call risk on those WFC issues but that’s not the scenario I’m worried about.
I’m just puzzled by why it would go down more than almost any big bank preferred on a risk-off day. It’s one of the highest rated and has no call convexity
Hard to understand how the small group of US min rates (USB-H, MET-A, BML-J) trade.
Adding to shipping preferreds here.
Just in case somebody knows they want to put some cash on the sidelines for awhile, for some reason or other Synchrony Bank is still offering a 1 yr 2% CD today…. https://www.synchronybank.com/banking/cd/?UISCode=0000000 seems out of line cheap for what it is when broker CDs are @ 1.70% and the US Treas = 1.36%…. Yeah, I know, exciting stuff…
Marcus (aka GS Bank) has 11 month no penalty CDs @ 1.90%
They were at 2% Friday. and the 1-year was 2,15%