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3/19/22 3:50 pm
NYCB reported to be in talks to acquire Signature Bank
Doesnt sound like a bank in crisis mode if true….
New York Community Bancorp Inc. is pursuing a deal to acquire failed Signature Bank, according to people familiar with the matter.
The Federal Deposit Insurance Corp. could announce a deal for Signature as soon as this week, said the people, who asked to not be identified because the matter isn’t public. No final decision has been made and talks could collapse. Representatives for New York Community Bancorp and the FDIC didn’t immediately reply to messages seeking comment.
Signature Bank, based in New York, was seized by the government this month after regulators lost faith in management and depositors fled.V
They should try to get concessions Like UBS is asking for taking on CS.
No future liability for any losses incurred by Signature.
Remember what happened to BOA and WFC after the GRC
They are still belching from just digesting Flagster, also.
FDIC announces deal to sell Signature Bank assets
Don’t forget Flag is the one connected to Calif government that was doing the rebates via card and bank deposit. The state had to have funds deposited there for the program.
Interesting how the unseen threads are interwoven. Stopped at a Carl’s Jr this weekend and noticed the card reader said Heartland. Maybe where Carl does his banking?
Looks like it’s a done deal-
NYCB takeover of Signature looks initially very positive, commons up 25% in the pre-market at the moment and thumbs up reactions generally – https://seekingalpha.com/news/3948785-new-york-community-bancorp-shines-with-30-gain-on-multiple-analyst-upgrades-amid-signature-deal
Curious to see how NYCB-U moves at the open.
I snagged a 100 premarket at 36.40 and then ditched it and the rest with a nice profit and just now sold and ran. Im not a big bank guy to begin with though. Absolutely blew a chance to get some NYCB-A at $17.05 and flip them too. I simply thought too long..Snooze ya lose….
Grid, I exited stage left and sold both to take profits in my oversized NYCB position and NYCB-U. We are not out of the banking crisis by any means and the Fed will continue to raise rates and more banks will struggle or fail with their portfolios. For my friends reading this post, I am NOT recommending anyone here sell ANYTHING. Please do your own deep DD and smile, Azure
Im worried too that this is a relief rally, so I sold. But greed is always hard to contain as I am still holding my Washington Fed and Triumph as they are still creeping higher….Today anyways. Probably should sell, but I will hold for now since I have little in this sector.
QURATE – S&P downgraded Qurate and QVC today for the second time in the week…. CCC+ now on Qurate…… Today may wife returned a $25 item of fudge she ordered due to poor quality control on the product received…. She could buy 30 shares of QRTEA with the proceeds…..
UBS has offered to buy Credit Suisse for up to $1bn, with Swiss authorities planning to change the country’s laws to bypass a shareholder vote on the transaction as they rush to finalise a deal before Monday.
The all-share deal between Switzerland’s two biggest banks is set to be signed as soon as Sunday evening and will be priced at a fraction of Credit Suisse’s closing price on Friday, all but wiping out the target’s shareholders, four people with direct knowledge of the situation said.
The offer was communicated on Sunday morning with a price of SFr0.25 a share to be paid in UBS stock, far below Credit Suisse’s closing price of SFr1.86 on Friday, the people said. UBS has also insisted on a material adverse change that voids the deal if its credit default spreads jump by 100 basis points or more, they added.
The situation is fast-moving and there is no guarantee that terms will remain the same or that a deal will be reached, all the people stressed.
Some of the people said that the current terms were unfair for Credit Suisse and its shareholders. Others criticised the plans to void normal corporate governance rules by preventing a UBS shareholder vote.
There has been limited contact between the two lenders and the terms have been heavily influenced by the Swiss National Bank and regulator Finma, the people said. The US Federal Reserve has given its assent to the deal progressing, they added.
While the current terms value Credit Suisse’s equity at up to $1bn, the figure does not reflect additional provisions the Swiss National Bank will make to ensure the deal is done.
Both sides have been locked in discussions with regulators since Wednesday, when Credit Suisse asked the SNB to provide it with an emergency SFr50bn ($54bn) credit line.
When this backstop failed to arrest a fall in its share price and stop panicked clients from withdrawing their money, the central bank stepped in to force a merger after becoming concerned about the viability of the country’s second-largest lender.
Deposit outflows from Credit Suisse topped SFr10bn a day late last week, the Financial Times has reported. Customers withdrew SFr111bn from the group in the final three months of last year
On Saturday night, the Swiss cabinet assembled in the finance ministry in Bern for a series of presentations from government officials, the SNB, market regulator Finma, and representatives of the banking sector.
The government is preparing emergency measures to fast-track the takeover and plans to introduce legislation that will bypass the normal six-week consultation period required for UBS shareholders so the deal can be sealed immediately, the people said.
The framework of the deal has been designed by Swiss regulators to provide maximum stability to the country’s banking system, people briefed about the matter said. Swiss authorities have already secured preapproval from relevant regulators in the US and Europe which are expected to issue co-ordinated statements today.
UBS will dramatically shrink Credit Suisse’s investment bank, so that the combined entity will make up no more than a third of the merged group, two of the people said.
However, the current term sheet for the deal does not specify what will happen to Credit Suisse’s individual business divisions, and simply outlines a 100 per cent takeover of the group.
Negotiators have given Credit Suisse the code name Cedar and UBS is referred to as Ulmus, according to people briefed on the matter.
UBS is seeking concessions and protections from the government, particularly from any pending legal cases and regulatory investigations into Credit Suisse that could result in fines or losses, the FT has reported. However, it is unlikely it will get indemnity from any losses on assets, one of the people involved said.
UBS also wants to be allowed to phase in any extra demands it would face under global rules on capital that govern the world’s biggest banks.
The SNB, UBS, Credit Suisse and Finma declined to comment.
Precedent is out there for this as UBS was on the other side of a bailout in 2008 – https://www.swissinfo.ch/eng/business/2008-crisis_the-day-ubs–the-biggest-swiss-bank–was-saved/44474630
Make that $2Billion, and they are changing the law in an emergency session of the Bundesversammlung to be able to do it without a shareholder vote.
This made me chuckle…
“Negotiators have given Credit Suisse the code name Cedar and UBS is referred to as Ulmus, according to people briefed on the matter.”
Ulmus is the elm tree, and I guess this where UBS is stepping in to stop Swiss Elm disease from spreading worldwide, like Dutch elm disease did from Asian 100 years ago…
So if this deal goes thru, I wonder if anyone (including the people on either side of this hastily arranged takeover) has any idea what will happen to CS bondholders? Bonds to be assumed???? Change of Control provisions? Anything potentially positive?????? CS doesn’t have any preferreds does it?
2WR – I am interested in the fate their bonds (my bonds) as well. Since it is not a default, in general, is not the acquiring company responsible for picking up their debt?
Beats me….. ha…. Don’t know if generalizing applies right now… All that should be able to be said is that the answer normally is in the prospectus…. Then again, under these circumstances who knows if even that will apply….. if this can be done without common shareholder approval, who knows what else can or will be done to get this thing out of the way asap….. no answers from me that’s for sure – and own no CS bonds.
UBS Agrees to Buy Credit Suisse for More Than $3 Billion
Credit Suisse’s $17 Billion of Risky Bonds Are Now Worthless
NOTE – This seems to be talking about only “AT1” bonds… I don’t know what that means…….
Tasos Vossos and
March 19, 2023, 6:56 PM UTCUpdated onMarch 19, 2023, 8:44 PM UTC
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Holders of Credit Suisse Group AG bonds suffered a historic loss when a takeover by UBS Group AG wiped out about 16 billion Swiss francs ($17.3 billion) worth of risky notes.
The deal will trigger a “complete write-down” of the bank’s additional tier 1 bonds in order to increase core capital, Swiss financial regulator FINMA said in a statement on its website. Meanwhile, the bank’s shareholders are set to receive 3 billion francs.
UBS to Buy Credit Suisse in Historic Deal to End Crisis
Watch: Manus Cranny on the key takeaways from the UBS deal to buy Credit Suisse.
The bond wipe out is the biggest loss yet for Europe’s $275 billion AT1 market, far eclipsing the only other write-down to date of this type of security: a €1.35 billion ($1.44 billion) loss suffered by junior bondholders of Spanish lender Banco Popular SA back in 2017, when it was absorbed by Banco Santander SA for one euro to avoid a collapse. In that instance, the equity was also written off.
In a typical writedown scenario, shareholders are the first to take a hit before AT1 bonds face losses, as Credit Suisse also guided in a presentation to investors earlier this week. That’s why the decision to write down the bank’s riskiest debt — rather than its shareholders — provoked a furious response from some of Credit Suisse’s AT1 bondholders.
“This just makes no sense,” said Patrik Kauffmann, a portfolio manager at Aquila Asset Management AG. “This will be a total blow to the AT1 market. You can quote me on that.”
Kauffmann believes that money should have gone to AT1 holders instead, leaving nothing for shareholders, as “seniority in the capital structure need to be respected.”
Wiped Out Credit Suisse AT1s Were Senior to Equity
Source: Credit Suisse
Note: Most junior instrument at the bottom; as of Dec. 31, 2022; as reported in bank’s Mar. 14 FI investor presentation
Pacific Investment Management Co., Invesco Ltd. and BlueBay Funds Management Co. SA were among the many asset managers holding Credit Suisse AT1 notes, according to data compiled by Bloomberg. Their holdings may have changed or been sold entirely since their last regulatory filings.
Pimco and BlueBay declined to comment when contacted by Bloomberg News on Friday, before the deal was announced. A spokeswoman for Invesco said that its investment teams are continuing to monitor developments.
AT1 bonds were introduced in Europe after the global financial crisis to serve as shock absorbers when banks start to fail. They are designed to impose permanent losses on bondholders or be converted into equity if a bank’s capital ratios fall below a predetermined level, effectively propping up its balance sheet and allowing it to stay in business.
Prices on those bonds fluctuated wildly as traders gathered for a rare weekend session on Sunday to weigh two scenarios: either the regulator would nationalize part or the whole bank, possibly writing off Credit Suisse’s AT1 bonds entirely, or a UBS buyout with potentially no losses for bondholders.
Prices oscillated between 20 cents on the dollar to as high as 70 cents when the deal was finalized. Following the FINMA announcement, some trading desks simply updated their clients that a write-down had occurred.
Credit Suisse Investors See Bail-In Risk for $82 Billion Bonds
The broader market for those risky European bank bonds, also known as contingent convertibles or CoCos, has also tumbled in the past two weeks, with the average AT1 indicated at a price of about 80% of face value on Friday, one of the steepest discounts on record.
For some investors, the fact the UBS deal rendered the notes worthless came as no surprise, given their well-known downsides.
Holders of AT1s knew they were buying high-yield risk with a hand grenade attached to it, according to John McClain, portfolio manager at Brandywine Global Investment Management.
“It’s absolutely the right thing to do to prevent moral hazard from creeping into that part of the market,” he said. “Those bonds were created for moments like this. Similar to catastrophe bonds.”
(Updates with Sunday trading in seventh and eight paragraph
AT1 = Alternate Tier 1. I believe these are higher yielding instruments that were designed to be forfeited in the event of a failure (default). My issue is a plain 4% (12/10/24) Senior Unsecured Note – not an AT1. However, who knows – “the baby may get thrown of with the bath water”.
That specific bond were trading ~75ish on Friday and FINRA. Schwab now shows an ask (to buy) for 90.114. Not sure if this is an encouraging sign or not.
thanks, Proto – yes I figured that out but hadn’t heard of them before… So it still remains to be see as to what’s going to happen to plain old CS bonds…. time will tell……….. I would think this to be a positive…
UBS will likely guarantee those bonds. Here is a quick search of what comes up as a COCO.
| 225401AC2 | CREDIT SUISSE INTERNATIONAL SR GLBL COCO 28 |
| 225401AF5 | CREDIT SUISSE INTERNATIONAL SR GLBL COCO 29 |
| 225401AM0 | CREDIT SUISSE INTERNATIONAL GLBL COCO 25 |
| 225401AP3 | CREDIT SUISSE INTERNATIONAL COCO 31 |
| 225401AU2 | CREDIT SUISSE INTERNATIONAL GLBL COCO 32 |
| 225401AV0 | CREDIT SUISSE INTERNATIONAL GLBL COCO 28 |
| 225401AY4 | CREDIT SUISSE INTERNATIONAL SR GLBL COCO 26 |
| 225401AZ1 | CREDIT SUISSE INTERNATIONAL GLBL COCO 33 |
| 225401BB3 | CREDIT SUISSE INTERNATIONAL COCO 33 |
| 225433AC5 | CREDIT SUISSE GRP FDG GUERNSEY SR GLBL COCO 25 |
| 225433AR2 | CREDIT SUISSE GRP FDG GUERNSEY SR GLBL COCO 26 |
| 225433AT8 | CREDIT SUISSE GRP FDG GUERNSEY SR GLBL COCO 23 |
| G25320AQ8 | CREDIT SUISSE GRP GUERNSEY I COCO 41 |
| H3698DAR5 | CREDIT SUISSE INTERNATIONAL SR GLBL COCO 28 |
| H3698DBM5 | CREDIT SUISSE INTERNATIONAL SR GLBL COCO 29 |
| H3698DCR3 | CREDIT SUISSE INTERNATIONAL GLBL COCO 25 |
| H3698DCW2 | CREDIT SUISSE INTERNATIONAL COCO 31 |
| H3698DDH4 | CREDIT SUISSE INTERNATIONAL GLBL COCO 32 |
| H3698DDR2 | CREDIT SUISSE INTERNATIONAL SR GLBL COCO 26 |
| H3698DDS0 | CREDIT SUISSE INTERNATIONAL SR GLBL COCO 33 |
| H3698DDW1 | CREDIT SUISSE INTERNATIONAL COCO 33 |
So CS had 2.862 billion shares outstanding. so about 1.15CHF per share?
There is no way that the bondholders don’t take this to court and tie up that shareholder payment after they got wiped out by 100%..
because.. why? they can’t read a prospectus?
Because they are still higher than the common holders in the stack.
not after a write down event they aren’t. this was debated ad nauseam when AT1 coco instruments first came to the market.
Here is an example prospectus:
Those first two paragraphs should be read over and over until one gets the general idea that almost all of the realms we think we operate within are false. We are not free, we are beholden to those in power and have truly been colonialized by a few large players.
Hank Paulson Playbook 101.
Did anyone receive the SJIJ interest payment due 3/16? I have not seen it at TD yet. Is it trading otc under a new symbol?
Rvert – I just looked at Fidelity…Nothing!!
Kitti, I have seen it happen with 4 different outcomes. 1) After a couple days new ticker assigned on OTC. 2) Moved to the $1000 Bond market and trades with cusip as a $25 bond 3) No ticker ever assigned and becomes in essence a private issue until redeemed or matures. 4) Long lag time then later assigned ticker on OTC… I remember this a few years ago when MB Financial was getting acquired by 5th Third. A 6% preferred was dropping on announcement several bucks and I and others loaded up at $24… For about 6 weeks it was totally gone. But after it went exD a new ticker showed up on OTC and first trades OTC were already back at $26. It later assumed yet a new exchange ticker and was removed from OTC.
So this could go several directions. Some worse than others. If I owned this and had a good luck charm, my inclination would be rubbing it with a wish it wound up on the bond desk.
Rvert, history on these shows there will be delays in getting paid from being delisted. Could be up to a week or two. I remember owning WTREP and after it went dark and untradeable the first dividend was delayed a while. The subsequent divis that followed were paid out in a more prompt manner.
FRC has suspended its common stock dividend
TECTP has been holding up pretty well this week, but dropped 17% this PM, now yielding about 11%. Anyone heard any news?
I checked their website and google and I could not find anything but with our current bank panic theme still going on I would look to that as the reason. Someone just said I am selling. Out. Done. Goodbye. Sure does not take many shares to move this small preferred after hours or even during the day.
There is probably no actual news to point to. I own a bit of TECTP I bought a while back.
I have a large position in TECTP and I almost wet my pants when it dropped into the 8’s. Per their website, Tectonic is a small well capitalized bank catering to the wealthy and they also have fund management and insurance divisions. TECTP is 80% insider owned. If not called May 2024 the issue changes to 3 month libor plus 6.72. While banks overall have been hurt by rapidly rising interest rates, I’m betting Tectonic doesn’t have near the deposit flight risk and loan loss exposures that the regionals do. I have small positions in Wesbanco and Zion preferreds – woe is me.
Insurance companies got hammered yesterday. They are up a bit today, but there are still some interesting preferred buys.
LNC-D was trading around par this morning, now slightly above, but I think there will be more opportunties. For those wanting more excitement, LNC common is yielding 8%.
ATH-E is also yielding 8%
MER-K (Bank of America 6.45%) trading under par here.
JPM-C 6% as well.
Cubi preferreds paid their dividends today as scheduled, at least not a bad sign.
Switzerland holds talks on options to stabilize CS. BBG
CS options also include Swiss spin off/UBS tie up. BBG
FINMA said to make statement supporting CS today or tomorrow. BBG
And if I figured correctly, next coupon will be 10.00% on E and 9.628% on F
Looks correct to me.
Now let’s hope there is a next coupon.
Yes – I got mine too even though I jettisoned the shares this week.
I haven’t seen anything posted on this but I just got notified by snail mail that RJFPRA is being called effective 4/3/23.
I posted in Sandbox on this a week ago Monday..
Thanks both for the heads-up – I had missed that. Purchased this back in Oct at 24.93 so a bit of profit plus a couple divvies. Now I need to figure out what to do with the 600 shares worth of the proceeds.
RJFprB is a good alternative. Remember that these are old Tri-State Bank preferreds that RJF acquired and will most likely call. RJFprB 3+ years to call, YTC now around 6.7%.
ZIONO..reset coupon today plus 4.24 over 3ML..or a 9.18 coupon for next 3 months……fwiw. There are a number of FTF resetting today 3/15.
If they are on review – per other comment on sandbox pg,can buy later after it drops if I think it’s stable. I bought yesterday & sold today–
I know nothing (as every one of my posts in the past year can attest), but I do have a slight understanding of Zions as a former Utah boy. I can’t see the Mormon church letting Zions fail. Too many members are invested in Zions, and I would not be surprise if the Mormon church (and its $200B in assets) is one of their biggest investors. The bank, the church, and the community are very intertwined. But, if you think I have any credibility, then you should re-read my first sentence.
Cali I bought more of the ZIONO for that reason.
Out of curiosity, I checked out Zion’s history. The Mormon Church divested its interest in the bank in 1962. Shortly thereafter the new owners incorporated the bank in Nevada.
All of this is truly inconsequential, yet for some odd reason interesting.
Interesting, but I’m sure they have many common interests, similar to how family members can have separate investments and accounts but work together toward common goals. My son went to school with at least 1 of Scott Anderson’s (CEO) kids, and Scott was on the parent’s advisory committee for the school. Never met him or his kids, but he seemed like a nice guy who always paid generously at school silent auctions. It seems that my recollection of the Mormon church’s assets was also a little high – they seem to be closer to $100B. Still, a substantial backstop if needed by a relatively small bank. I picked up a little ZIONL and ZIONO today on the belief that the Mormon church is watching the situation closely, and that they are well aware of the impact on their members, their image, and the community if Zions fails. Not recommending that anyone buys ZIONS, but I have 55 years of watching Mormons rally together in difficult times, and it is worth a small investment to me. BTW, I am not an active member of Zions or the Mormon church, so I don’t have a dog in this fight other than my small investment.
Thanks. I’m actually looking at picking up some shares. 😁
goin2cani, The Mormon’s LDS church has its investments (100 billion?) with Ensign Peak Advisors. Is it known if Ensign has any of those assets in Zion’s Bankcorp?
OK, MarkS, you got me curious too, so I did a little reading while I was waiting for a conference call to start.
The Mormon church didn’t intervene when Zions got into trouble in 2008, and the bank ended up taking $1.8 billion in TARP money. If the church didn’t intervene 15 years ago, I don’t see why they would intervene today.
Also, I saw that the church started the first department store back in the 19th century called ZCMI. They divested it also, and didn’t step when it later got in financial trouble and changed hands several times.
So, only a couple of examples, but it doesn’t look like they step in to save businesses they have sold.
Finally – I was reminded that the church is actually called “The Church of Jesus Christ of Latter-day Saints”, not the Mormon Church. https://newsroom.churchofjesuschrist.org/style-guide .
Thanks. All true, but old habits are hard to break. Many things happen in Utah behind the scenes, and usually (but not always) for the greater good. Also, even my uncles, who served as bishops in their wards, still refer to themselves as “Mormons”. Most of my relatives, friends, and former neighbors do as well, and I use the term with high respect. I understand what the LDS president wants, and I also understand that my wife would like me to do the dishes and laundry every day. Both will need to learn to be a little disappointed in my results. It is my personal character failing, but not disrespect.
I must say as an aside these religious organizations have shadow tentacles everywhere. I worked with a fund which LDS invested in Memphis on a real estate development project. Nashville has become the scientology church’s largest real estate investment (or one of them). If one worked in Nashville and someone said they were from CA developing real estate, everyone understood that is the scientology church.
No judgement on my part towards the organizations. I just wish I had their tax status.
Yes, ZION was in big trouble during the financial crisis in 2008 and “someone” stepped in to save their butts then. I think you are correct in your assessment here too.
Today, the borrow rates on the ZION issues are roughly 450% to 550%. “I know nothing” about the significance of this other than shorting these overnight is a fool’s errand.
FWIW I think they would have set based on Monday’s 3 Month LIBOR of 4.86629 …. That would make ZIONO a rounded 9.10%
Anyone looking at ZIONL. It floats 9/15 and this is a note due in 2028
Currently trading at 21.80 with an 8% before reset at L+389
Signature Bank Chicago 5.45% 5 year CD matures 3/24/2028
offered at Fidelity.
I’m no expert, but apparently this bank is not the same as the one closed by regulators. Anyone know how to double check this?
I believe this IS the same bank the regulators closed. However, this CD is FDIC insured and callable, so one would have that backstop with the customary limit of $250,000 coverage.
On Sunday, Signature Bank Chicago tweeted that it isn’t affiliated with Signature Bank New York. “In light of today’s FDIC statement about a closure of a bank with a similar name to ours, Signature Bank Chicago is taking this opportunity to affirm that we are not affiliated with Signature Bank New York in any way,” it said.
Thanks for the correction!
A name change might be in order LOL
This morning NINGI Research (of whom I know nothing) issued an extremely negative report on Arbor Realty, in effect accusing them of fraud. Anybody know anything about this?
Looks like they try to drum-up positions to short. If true, Arbor is sunk.
The only thing that they did not say was a company lie, is the name Arbor.
And Ernst & Young has been in on it for years…even stranger, if true.
The stock & P’fds are down.
Hope the report is wrong, and just a hit piece.
Wirecard fooled their auditor for years about fake bank accounts. It isn’t unheard of. The comment board of Invitation Homes has similar comments about the company falsifying numbers because their results seem to defy expectations
adding to this…
looking it over…
After reading it over, quite quickly I will admit, they did not make their case clearly with evidence. I do not know ABR’s business well enough to say this is BS but one would think a short attack piece would make it VERY easy for anyone to see and comprehend quickly.
Based on googling around their short pieces have little to no success.
ABR’s graph shows large drops around ex-div day as normal with this short piece helping the down draft.
NINGI’s website is shady and they have a disclaimer on it which basically says whatever we put up here is not factual, just an opinion, and if you click disagree you are sent to a google search page.
I have read enough short attack papers to know how a writer can make their case very clear with evidence. This one failed for me personally.
and nothing about their forensics – facts & sources.
I think that the short piece is nothing more than a cheap shot hatchet job and I agree it is poorly written. I think their assumptions and projections are BS, and who the hell is Ningi Research anyway. CEO Ivan Kaufman is a respected person in the mortgage industry and a smart guy (google him) and I find it extremely hard to believe that he would jepordize his and his family’s net worth (which is tied up in ABR stock) by breaking the rules or committing fraud. I have been listening to their conference calls for years and would be shocked if I have been fooled. I prefer to put my trust in him and Ernst and Young, not “Ningi.” Time will tell, I am long common and preferreds.
Arbor just posted a response, check it out
Was there ever a response that was along the lines of ” yeah sorry you caught us”
Seems actionable for litigation- damages, etc
Didn’t say he was entirely wrong tho….
5% for a 3 month CD from Merchants Bank of Indiana
Finally seeing a decent offer from a local savings and loan Luther Burbank at 4.75% for 3 month’s
5% Five year noncallables are out again. SYNCHRONY BANK has one at 5% coupon, 5.06% YTM.
LNCRD and JXNSF grabbed both of those this morning
Lower quality higher yielders
Because of the illiquid nature and low trading volumes that are typical for preferreds, this is the kind of environment where it is ideal for you to get those once in a year or longer bargain opportunities.
Please feel free to share any of your big discount pickups. I have been dumping some of my short term individual bond holdings this morning as ST yields are plummeting and contemplating some of these very appealing perpetual 6%+ yielders of uber high credit quality.
MBINM MBINO HTLFP
Thanks RB picked up 600 MBINM @23.20
The drop in HTLF -common, seems way over done. Seems far from tech, JV stuff. SCHW seems overdone too.
BANK – nasdaq bank index has dropped about 31% in the last month.
Oogly out there.
Nibbled some NYCB-U & MBINM — so far they are doing ok, but with the market going from up to down, that will likely change.
RB were you able to land these in time to collect the next dividend?
Yes, bought yesterday. Ex dividend is today March 14 on the MBINM and MBINO. Think MBINM is gift with 9% yield. Think it is worth 27 after the dust clears. MBIN common is holding up well relative to other banks.
I am wondering if we have hit a speed bump that will slow down the Fed’s on raising rates. Makes me think if rate increases are put on pause or slowed down then getting 6% on a IG preferred may look great locked in for the future. I was actually looking at the MBINN
Looking at adjustable’s, I was trying to figure if the reset on some of these are going to be lower 1 to 2 years down the road if you look at historical rates on 5yr treasuries for example.
I was expecting a 50 basis point coming up, now a pause or 1/4% looks more likely.
Our economy is more of a services than manufacturing economy. Every tech or manufacturing job supports 10 low paying jobs. You have one tech person laid off they spend less at the local deli or Starbucks. I think we will see a slowing economy, it just takes time.
I picked up some of the -M today with my CUBI-F proceeds.
bought UCBIO @ 19.4ish = 8.9% yield
Nippled at TFC-R @ $17.91 earlier today.
Gee, MFZ, I hope you mean “nibbled.” 🙂
Good catch! This is what happens when the market drops like a rock.
Sticking neck out and picked up 200-400 shares of some banks that got hit this morning
Got some C-K, which is recovering today.
Not for me I’d rather own BONDS. CDs,and cash.
Bank preferreds are getting killed every day.
I don’t need that.
Dollar Slides, US Futures Rally as SVB Nerves Cool: Markets Wrap
US stock futures surged and the dollar retreated after American financial regulators took steps to shore up the financial sector with a new lending program in the wake of Silicon Valley Bank’s failure.
Futures on the S&P 500 jumped more than 1% and the greenback slid versus major peers after Treasury Secretary Janet Yellen said the her office would protect “all depositors” at the bank, whose demise Friday marked the biggest such event since 2008. The government actions will also include a program offered by the Federal Reserve with funds from the Treasury.
The US government steps in and says people with money deposited at SVB will be able to access their money
Does anyone know if this includes ALL parties/companies/institutions with money deposited at SVB? It’s not clear to me.
Article says all depositors will be able to access funds Monday morning. A special assessment will be made to (all?) banks.
Clarification: I meant depositors at Silicon Valley Bank.
Regulators close New York’s Signature Bank, citing systemic risk
3 crypto banks were shuttered:
Silvergate, Signature and Silicon Valley; seems to be an attack on crypto by the FDIC and orchestrated by our friends at the FED 🇺🇸
SIVB- Silicon Valley Bank round two! I had a lengthy post earlier about the SIVB failure. The bottom line from both a depositor and/or investor standpoint is that it literally CAN happen to any US bank. Depositors attempted to remove about 25% of SIVB’s deposits over a few hour period, a warp speed bank run. NO bank could have provided that much cash on that short of a notice, the “too big to fail banks” included. It is a 100% confidence game and if enough folks lose confidence quickly, the bank is toast. The underlying asset quality, etc be darned.
So what is actionable if this is true? These are MY opinions, and are NOT facts, so I might be 100% wrong just like I was on the regulators letting SIVB fail.
1) My 51% belief is that First Republic Bank- FRC has a bank run and fails. Common goes to ~zero, preferreds are high risk of also going to ~zero.
2) There are 61 “banks” that underlie preferreds/babys/terms. I used an expanded definition of bank, so you can argue that some on this list have minimal bank operations. Also I most likely missed a few that should be on this list.
3) These 62 banks have 179 issues outstanding. They range from Citibank all the way down to small regional banks. I still think the Feds would not let the TBTF fail, despite what Janet said today. At the other extreme, if you had bank runs on the smallest 10 or 20, they MIGHT let that happen.
4) Here are the 61 banks listed alphabetically.
a. If you own any of the 179 issues, you will have to decide if you think they will survive or not. Ratings proved to be worthless as SIVB was rated A3 last Tuesday 3/7 and is now in default.
b. If you have strong conviction a bank will survive long term, you might put in below market buy orders and hope to get filled.
c. If you have strong conviction a bank will not survive, you might put in short sell orders. Or you might short one of the regional bank common ETF’s: IAT or KRE.
AMBK-AMERICAN BANK INC
AUB-Atlantic Union Bankshares Corpo
BAC-Bank of America Corporation
BOH-Bank of Hawaii Corporation
BWB-Bridgewater Bancshares, Inc.
CCNE-CNB Financial Corporation
CFG-Citizens Financial Group, Inc.
CFR-Cullen/Frost Bankers, Inc.
COF-Capital One Financial Corporati
CUBI-Customers Bancorp, Inc
DCOM-Dime Community Bancshares, Inc.
EFSC-Enterprise Financial Services C
FCNCA-First Citizens BancShares, Inc.
FGBI-First Guaranty Bancshares, Inc.
FHN-First Horizon Corporation
FITB-Fifth Third Bancorp
FMCC-FEDERAL HOME LOAN MORTGAGE CORP
FNMA-FEDERAL NATIONAL MORTGAGE ASSOC
FRC-FIRST REPUBLIC BANK
FRME-First Merchants Corporation
FULT-Fulton Financial Corporation
GS-Goldman Sachs Group, Inc. (The)
HBAN-Huntington Bancshares Incorpora
HWC-Hancock Whitney Corporation
INBK-First Internet Bancorp
JPM-JP Morgan Chase & Co.
MFIN-Medallion Financial Corp.
MNSB-MainStreet Bancshares, Inc.
MSBI-Midland States Bancorp, Inc.
MTB-M&T Bank Corporation
NYCB-New York Community Bancorp, Inc
ONB-Old National Bancorp
RF-Regions Financial Corporation
SBNC-SOUTHERN BANCSHARES N C INC
SI-Silvergate Capital Corporation
SNV-Synovus Financial Corp.
TCBI-Texas Capital Bancshares, Inc.
TFC-Truist Financial Corporation
TFIN-Triumph Financial, Inc.
UCBI-United Community Banks, Inc.
VLY-Valley National Bancorp
WAFD-Washington Federal, Inc.
WAL-Western Alliance Bancorporation
WBS-Webster Financial Corporation
WFC-Wells Fargo & Company
WTFC-Wintrust Financial Corporation
ZION-Zions Bancorporation N.A.
If the fed backstops all SVB deposits, then isn’t this all a moot point?
SJC, three points:
1) I don’t know, and it is clear the “feds” do NOT know how this is all going to play out. So we are investing/depositing with significant, non-zero, uncertainty.
2) Let’s assume the Feds announce a 100% backstop for all SVB deposits. It will make all of their depositors happy.
3) Unless the feds announce a 100% deposit backstop for all US banks, then what will prevent the next run, for example @ First Republic? I think the feds doing this is unlikely, but once again we have high uncertainty.
Bottom line: is that each investor will have to decide on their own how the feds will respond to the whole situation.
For the record, we have about .001% of assets in bank preferreds/babys/terms from this list. We do not have any deposits >$250k per bank currently, but did broach the limit within the last week, so are breathing easier. We have made substantial changes to open orders for many related issues.
BTW, I used to have a ~SJC address in a previous life which guides some of my insight into SVB.
Seems like the new facility effectively backstops the other banks, by allowing them to post high quality collateral (treasuries, MBS, maybe IG) bonds at PAR for loans that are due in a year (of course this will be extended if necessary). So if a bank has long term treasuries worth 75, they can pledge these at PAR at get a loan from Fed for 100. This solves all liquidity problems for all banks. This is effectively the backstop you mention in (3) above. IN THEORY. Of course, there will be unintended consequences, as there always is….but those are down the road. Seems like a kind of clever solution though.
Tex – with the latest update on the government intervention, are you still at 51% on FRC?
Sjc123, they way I am reading the most recent news it seems the worst has been averted and only the banks with highly correlated clients are paying the price. Signature got silvergated it seems. Crytpo bros mania brought down another. Crypto and startups seem to have a lot in common with this mess.
SBNY was also shut down.
FRMEP trading at par
Someone correct me if this is wrong
This issue is unrated from before the merger, I believe the current holder is IG
The lowest rating of investment grade Moody’s Long-term Corporate Obligation Rating. Obligations rated Baa3 are subject to moderate credit risk. They are considered medium grade and as such may possess certain speculative characteristics. Rating one notch higher is Baa2. Rating one notch lower is Ba1
That is a completely different bank lol.
First Merchants is rated Baa1, which implies FRMEP would probably be Baa2 :
We are starting to see some unique opportunities where a little small pivot position build back to perpetuals might not be a terrible consideration.
Take for instance; the longest duration dated corp bond for Public Storage yields in the 4.8/4.9% as I type.
The fixed perpetual PSA-H 5.6% preferred has traded all the way down to $23 handle putting annualized yield (not factoring in par discount, coupon only) over 6%.
I have said this many times in the past. I’m fine with a 6% yield with a Public Storage/JPMorgan/MetLife preferred as opposed to chasing another 100 or 200 bps only to have that position fall into the abyss.
MET-E also trading lows of day here and inching back to 6% yield.
Have a stack of the one’s you mentioned around 6.5% but agree with you re the current relative value. I mean – we can’t line everything up with a 12-18 month duration and run the risk of a market that we know can turn on a dime. Even for a flip, appears opportunities are in sight. And if the flip doesn’t work, they’re still respectable holds. Nailed down a few 1-year USTs north of 5.3% early in the week though keeping the “welcome” sign out at the pfd window.
Morning all – hoping that we see volatility pick up to the downside in the coming days so that we can snag some bargains, like last year.
TDS preferreds and UZD, etc finally coming back down. Any folks looking to repurchase these?
ONBPP / ONBPO
7% IG Qualified
Financials look to be down more than others
SVB maybe causing concern
Holding, breathing slowly, building cash (not fast enough)
watching for long term holds
Glad you brought this up, PickleNick. ONBPO has slightly better YTC and EAR numbers, and Moody upgraded both issues to Baa2 in February 2022.
STAR – No direct mention of the preferreds yet, but what was approved was to include redemption of all 3
NEW YORK, March 9, 2023 /PRNewswire/ — iStar Inc. (“STAR”) (NYSE: STAR) and Safehold Inc. (“SAFE”) (NYSE: SAFE) today announced that STAR stockholders and SAFE stockholders have each voted, separately, to approve the proposed merger between STAR and SAFE at their respective special meetings of stockholders held virtually today, March 9, 2023.
At the STAR special meeting of stockholders, the STAR stockholders approved the merger and the issuance of STAR common stock in connection with the merger. At the SAFE special meeting of stockholders, the SAFE stockholders approved the merger and the proposed changes to SAFE’s Caret program. The final voting results of the STAR Special Meeting and SAFE Special Meeting will be filed by STAR and SAFE, respectively, as part of a Form 8-K with the U.S. Securities and Exchange Commission.
The closing of the merger and related transactions remains subject to the satisfaction or waiver of various closing conditions. The companies are currently targeting closing the transactions on or about March 31, 2023; however, there can be no assurance that the closing will occur in that timeframe or at all.
So why are these trading under redemption? Especially star-g, down to 24.62
Just wanted you to know that I pick up shares to hide out in one of Star’s preferred issues. Thanks for your efforts!
The way the market is across the board right now, it’s best to hold thanks until after the deal actually closes….. I’m not sure of anything anywhere anymore, but thanks. That being said, STAR’s flush with cash to close this deal, so as a company they should be in a great position to weather anything.
Lot of action here before close.
JPM-C 6% perpetual preferred trading back below par.
There are several high quality 6% yielders now back under par, Public Storage, MetLife etc.
WFC-PRQ pays 5.85% coupon. At $24.50 a share, it’s paying 5.9%. 2 more dividend payments (2.95%) before it floats at Libor(5.123%)+3.09%. . Would float at 8.2%. To me that means WFC calls it for +2% capital gain. The gain would be total 4.95% in 6 months.
Am I missing something here? Does anybody think WFC would not call this issue?
It’s a low float rate if rates ever go back down in a few years. That’s all I can think of for being below par. That and many people overrate current dividend. Looks like a good short term play if not longer.
I just cannot see WFC allowing a floating rate of 8.2% in terms of today’s LIBOR rates. Of course, 90 day LIBOR could drop. So, I like the risk/reward here.
WFC-R looks better than Q at current pricing. Higher offset rate makes it a better long term choice you just have to wait 6 more months to get it whie collecting 6.75%
Perhaps I missed something, but I am unable to find the ‘new issue’ listing. Appreciate anyone’s help. thanks, Howard
Howard, saw in another thread Tim is aware of it and will add it back to the mix.
D, Its there. Under “Categories”….”New Issue”
ENBA at risk of getting redeemed on April 15, the day it otherwise begins trading on its reset terms (5yrTsry + 3.593%)? I hold some.
Yesterday, ENB filed a prospectus for ~$3 billion of new debt.
USE OF PROCEEDS
We estimate that the net proceeds of this offering of the Notes, after deducting underwriting discounts and commissions and the estimated expenses of this offering, will be approximately US$2,979,013,724. We intend to use the net proceeds to reduce existing indebtedness of the Corporation or its subsidiaries, partially fund capital projects and, if applicable, for other general corporate purposes of the Corporation and its affiliates.
I have ENBA floating off of 3M LIBOR + 3.593% or approx coupon of 8.72% on 4/15. At this spread it looks to be price locked close to liquidation. Rather than holding cash in MM, I am purchasing floaters like this one, with price close to liquidation price so there is little/no price risk and if not called I get a nice return. Once markets stabilize after all rate hikes have occurred, I’ll look to switch back to fixed rates.
JDC, I agree and am also hoping for an additional variable. Im hoping the perpetuals get roached out more then rotate out of the floaters into them!
I am a bit confused, which is pretty much my normal state. But END series A doesn’t appear to float, it looks fixed. Unless I’m being particularly dense this morning.
Mark, if you are referring to ENBA , this issue will begin floating 4/15/23. “On 4/15/2023 until 4/15/2028 the interest rate on the Notes will be reset at per annum equal to the three month LIBOR plus 3.593%. On 4/15/2028 until 4/15/2043 the three month LIBOR will be, plus 3.843%. On 4/15/2043 until 4/15/2078 the three month LIBOR will be, plus 4.593%”
https://www.quantumonline.com/search.cfm (just type in ENBA)
Thank you. Like I said- I am particularly dense this morning.🥴
Mark, First 5 years fixed…Next month its a floater assuming it doesnt get redeemed.
…On 4/15/2023 until 4/15/2028 the interest rate on the Notes will be reset at per annum equal to the three month LIBOR plus 3.593%. On 4/15/2028 until 4/15/2043 the three month LIBOR will be, plus 3.843%. On 4/15/2043 until 4/15/2078 the three month LIBOR will be, plus 4.593%. Prior to the initial Interest Reset Date and within 90 days following the occurrence of a Rating Event, the Company may redeem the Notes at $25 principal….
Add on…It doesnt matter…Being redeemed…
Thanks. See above response to Azure.
Mark, Now that it is being redeemed, there goes one of the few hideouts I had that I was willing to tolerate and own. Next domino to fall will be ALL-B Im sure. My “Closed for Business” sign is getting closer to be hanging on the door.
still looks like a few pennies available at 25.25 on enba??
Its a little better than money market yield at that price. Im still holding mine.
Bob, what is the expected payout? Thanks.
i believe it will be 25.39
My apologies to ENBA holders. I started buying in when it was below 25 last month, so of course it is being redeemed. Sometimes I am like like Tony Soprano – “Midas touch in reverse”.
All in all, Private, it was a better buy than say buying PACWP last month would have been!
There was a discussion a few days ago about Silvergate and the FDIC. I can’t find that thread to reply, so I am posting here:
FDIC officials step in to help resolve Silvergate troubles
Federal Deposit Insurance Corp. examiners are at the headquarters of Silvergate Capital to explore ways to keep the bank afloat amid the difficulties caused by the collapse of cryptocurrency exchange FTX, said people with knowledge of the situation. The examiners reportedly have been on-site since last week and are conducting a review of Silvergate’s records and books.
I pretty much washed my hands of the bank. I am very thankful I unloaded so much when the preferred dropped recently and then bounced up quite high. The little bit I had left was sold when the 10K was delayed. Too much drama for my taste. I have no interest in gambling further with them. Good luck to anyone who tries!
I get the feeling that the people in charge may not have the will and energy to see this through and will just wrap it up. The only thing that will save it is super easy money that gives the people in charge a very easy way out and keeps their jobs. That amount of money might be a tad too big for them to accept what will happen to them if it does come. Which means being fired. Thus no real incentive for them to agree to harsh terms. The insiders were selling hard while times were good. I cannot imagine they own much now days.
Well even I am right once in a while. Posted that right before this news came out.
Why SI-A is up 15% on this news?
Not sure how many shares traded but I guess they think in liquidation it has some decent value. I will guess it does not. Like one dollar as the company gets drained by lawyers, insider pay dragged on for ages, advisors, normal bills, etc.
2yr & 5yr CDs today
* 5.25% ~ Morgan Stanley, 2yr noncallable, FDIC, semi, 3/17/25, 61690U3A6
* 4.8% ~ Morgan Stanley, 5yr noncallable, FDIC, semi, 3/16/28, 61690U3C2
Wed. 9:15NY …. LIBOR & 3mo Term SOFR above 5.00%
Re active Floaters ….. if found under $25. call level …. should be defensive.
FTAI is offering a new preferred FTAIM. Anyone know the talk on pricing?
Thanks LI–my RSS feed is broken so am not getting SEC filing for the moment til I get it fixed–i.e. they want a monthly payment now on Feeder.
Here is the FWP for FTAIM:
9.5% coupon until 6/15/28. Then resets at 5-yr Treasury + 5.162%.
The temp symbol (initially, at least) is FAVTV.
FTAI AVIATION LTD FIXED RATE RESET CUM PERP PFD SER D
“…Powell tells Congress rates will likely be ‘higher than previously anticipated’…”
Equity indices near lows of the day here on this revelation.
As of yesterday close, I am now 100% out of any REIT related exposure.
I’m seeing 11 month Treasury Notes trading at all-time yield highs here looking to breach 5.3% !
NEW YORK, March 08, 2023 (GLOBE NEWSWIRE) — FTAI Aviation Ltd. (NASDAQ:FTAI) (the “Company” or “FTAI”) announced today its intention to offer Fixed-Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares, liquidation preference $25.00 per share (the “Preferred Shares”), in a registered underwritten public offering. The Company intends to apply to list the Preferred Shares on the Nasdaq Global Select Market under the symbol “FTAIM”. In connection with the offering, the Company expects to grant to the underwriters a 30-day option to purchase up to an additional 15% of the Preferred Shares being offered to cover over-allotments, if any.
The Company intends to use the net proceeds from the sale of the shares in this offering for general corporate purposes.
An 11 month noncallable 6% CD has arrived!
Let’s hope others follow suit that can be readily more traded via our current broker platforms.
I saw some credit unions offering that ‘teaser’ rate–if we can get everyone to 6 I will be loading up.
Tim – I concur. Wanted to add that there is a new issue JPMorgan 18 month coming out; it settles in the next two weeks.
YTM is 5.5% It starts with a 5% coupon, steps to 5.5% in 6 months and then 6% in one year.
If that’s the one I see on Fido, I see that it is NOT call protected, so could be called before it hits 5.5, let alone 6%. Still, 5% for 6 months is better than any others they list, except another JPM at 5%, callable after 3 months.
CR – It’s merely a minor hedge and part of an overall tactical plan. Say something crazy happened and rates go much higher. At least you get to 6% on this one where majority if not all new issue higher yielders are not going to be call protected anyways.
Was this offered through Fidelity? If so, no longer available.
Gary, Fido shows “not offered” if I put in CUSIP # (too early??), but if you go to “new issues” on the Fixed Income page, and click on CDs, can filter by name or maturity date, and scroll to JP Morgan maturing 9/24, showing as “step up” w 5%, and I was able to purchase. When I put in order, CUSIP was greyed out, so maybe that’s why I couldn’t find it that way.
CR, Gary, and theta,
on my Fido page, in the “New Issues” screen, I see that JP Morgan CD with those step-ups, and maturing 9/2024, but it has a different CUSIP –> DSN333718. So I’m not certain that this is the CD theta found.
Seems to have identical terms. I don’t know a CUSIP from a Tulip, but in my account, they’re in numerical/alphabetic order, whereas this one starts with 3 letters, so I wonder if it’s a temporary # similar to temporary symbols of Prefs when first on OTC??? Maybe one of the pros here can tell us.
What lucky timing on this CD. This morning’s revelation by the Fed is exactly why I wanted this step up hedge. This CD was wiped out earlier today. No more available. I do see two more new CD issues on deck from JPM settling in 10 days but they are fixed and callable with a 5.45% and 5.5% interest rate. I’ll see if I can get a CUSIP that works for you.
Theta, If you have any weight to throw around, see if you can get me a 5.5%-6% 5 year non callable. I would like to add a little longer duration! 🙂
I do see Wells Fargo just issued a 2 year non callable monthly paying 5.375% YTM CD so they are creeping north with a bit longer call protection.
Too funny Grid. Right those non-callables will be inching up more and more. Did you see the new agency issue FHLB that settles on 3/30/2023 now with a 7% coupon!! Callable of course but this is starting to get entertaining.
I am really on the fence about duration.
I am rolling T-bills (6 mo, mostly), but I think rates may keep climbing for a while — and then probably tanking when the “real” recession shows up.
I would like to lock in for longer, but I don’t want to leave too much on the table (I still remember some 15% bonds my dad bought in the 80s).
Chances are, I will wait too long.
My task of the moment is to keep freeing up cash by selling some things as they rise a bit. I have a few things I won’t sell, but not very many – if the price is right.
I’ve been rolling 6, 9 mo. and 1 year T-Bills too adding monthly. Up to 40% of an allocation that I eventually want. Yesterday, also pegged a 1-year FHLB bond paying 5.4%. Ignoramus that I am, I did not even realize these are state and local tax-exempt and bought it in my IRA. I may add more of it in my taxable account.
FWIW re CD IDs, I looked at a different JPM CD that I’d bought (or requested) last week. On my orders page, Fido had it listed as DSN***, but now that it’s in my account, it has standard type of CUSIP. So again, I guess DSN*** is a temporary #.
CR – As you described, I entered in the CUSIP and was not able to buy. I then went to the new corporate note issues thinking it might be there instead but found one with a very similar but different CUSIP. Thanks very much for your help.
I don’t see any CDs there – where are they hiding them?
JXN new pref. 250m 8.125% ish
Senior unsecured = Baa2 – on credit watch negative
is it trading yet? if so symbol?