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For those involved in Hawaii Electric Pref
https://www.power-grid.com/td/outage-management/hawaiian-electric-focuses-on-wildfire-safety-in-190m-grid-plan/
I read it as positive but who knows?
BC-A, -B, and -C (BBs) all dropped this morning, particularly BC-B. Parent stable.
Not a big move, these are fixed rate (somewhat low) and if rates are now planning to stay higher, longer, then I can see why these are dipping. Looks like basically back to where it traded mid-Jan, trading well above where it was in Nov, then moved up, when rates were first thought to maybe drop in March. I’ve seen several lower fixed rate issues trading down a bit since rate drop now later (much later?) than speculated.
MITN 2029 9.5% Senior Notes trading this morning.
I see them on Vanguard. Bid at $24.97 and so far volume just under 50,000 shares. Sure is a juicy Dividend, but what a company!!
Thanks Steve–2 weeks after issuance.
Does any understand what Spire (SR) is doing with their new Note offering? Some of the funds are for SR and other half for securityholders?
https://finance.yahoo.com/news/spire-announces-launch-300-million-134300034.html
speaking of SR, huge dump on SR-A:
volume = 136,000 shares (14,800 avg daily volume)
bid/ask = 23.86/23.90 (23.85 last price, down 2.25%, or 55 cents)
Common stock up slightly.
Is this the reason? I guess sellers think 5.30% for a senior note is a better deal.
ST. LOUIS, Feb. 5, 2024 /PRNewswire/ — Spire Inc. (NYSE: SR) announced today that it has priced a registered underwritten public offering (the “Offering”) of an aggregate principal amount of $350 million of its 5.300% Senior Notes due 2026 (the “2026 Notes”)
Puzzling? I would think a 5.3% offering would make give support to the existing 5.9% preferred issue. Also – the funds from the note will be used to pay down debt. Does that include calling the existing 5.9% issue at first call date in 8/24. Either of those scenarios should at least support if not increase the price of the existing issue.
I think if we have a market panic before SR-A recovered you might get an even better entry point.
They have also filed for a $200 million common stock offering. That is a lot of capital they are raising for a $244 million microcap stock (according to Fidelity). I wonder what the reason is?
Not sure what you are looking at, but Spire has a $3.2 billion market cap.
Yeah, I looked at the wrong browser tab. I had the preferred open as well as the company and it did not register that “Market Cap” was not the parent company market cap but the preferred issuance size.
Another dump for SR-A today. Big seller at $23.60 right now
I am still searching for news / reason???
Wells Fargo & Company Announces Full Redemption of its Series R Preferred Stock and Related Depositary Shares
https://newsroom.wf.com/English/news-releases/news-release-details/2024/Wells-Fargo–Company-Announces-Full-Redemption-of-its-Series-R-Preferred-Stock-and-Related-Depositary-Shares/default.aspx
Another one bites the dust. Although I guess we all knew deep down a G-SIB isn’t going to leave a 10.31% yielding preferred out there.
Thanks for posting!
Wells series S $1000 par floats on June 15. Likely to be called.
Thanks J
I’m not seeing that. Not on quantum nor my systems…. truth is I already thought it had been called for 3/15!!! . But Its not on my calander in my handwriting so. In between that and Q they worked at extremely well. And there it is on the news wires. Just shows you even the best systems aren’t mistake proof
Rates Popping…red day for equities at midday.
5yr T ~ 4.12%
10yr T ~ 4.17% ~ up 38bp since Dec 26
20yr T ~ 4.46%
30yr T ~ 4.35%
30yr Fixed Mortgage ~ 7.04%
15yr Mortgage ~ 6.38%
ISM Services PMI ~ up
Powell & 60 Minutes interview ~ negative on immediate rate cuts
Good morning everyone,
The Feds are ending a Bank emergency lending program. As I understand the program, it allows, among other things, banks to value the assets on their balances sheets at full or near full value. If any of you guys have any small banks with underwater portfolios, you might want to take a look at this:
https://www.arnoldporter.com/en/perspectives/advisories/2023/03/the-feds-new-bank-term-funding-program
See also
https://www.federalreserve.gov/newsevents/pressreleases/monetary20240124a.htm
> As I understand the program, it allows, among other things, banks to value the assets on their balances sheets at full or near full value.
Not exactly; you’re conflating two separate things.
1. The BTFP allows banks to *borrow* at the par value of certain securities that have declined in value due to the interest rate rises.
2. Those securities MAY be held at their full value on the balance sheet if they are classified as being “held to maturity.”
I’m simplifying a bit but, while the expiration of the BTFP might make it harder for some banks to fund their liabilities, it won’t otherwise affect how their balance sheets look. Classifying MBS from 2020 (or whatever) as being held to maturity will still be available to them.
O. Chongusu,
You’re absolutely correct in your analysis. I didn’t conflate though- just poorly written. My bad!
I stand by my basic premise- be careful. I have listened to talking heads, far more knowledgeable than myself, suggesting that the upcoming program’s ending was at least in part a cause for NYCB’s cut in dividend.
Jumping into the fray…….
When NYCB purchased the Signature assets from the FDIC, that elevated their balance sheet to “the Big Boys” – over $100 billion
NYCB has the lowest capital of the Big Boys.
The proposed new capital requirements for Big Boys are even further away.
NYCB had no choice but to take all reasonable steps to increase capital to get closer to the new standard..
I made an initial query: does preferred stock qualify as Tier 1 capital?
It looks like it does.
Which suggests perhaps why NCNB did not cease its high preferred dividend. If it did, there would be no chance to issue new preferred.
Westie – yes preferreds of banks qualify but only if non cumulative. I am not certain their are any old cumulative banking issues out there–seems like I have seen a few but don’t know where.
Tim, the NYCB trust convertible (NYCB-U) is cumulative.
Hey Westie,
There is no “fray” as far as I’m concerned. I don’t disagree with your position.
I’m just approaching the issue from another angle. According to the last numbers that I saw, NYCB was sitting on about $800-900 million in loses on securities held for sale. If the Fed program ends as expected, and banks are no longer able to fully value their holdings to use as collateral with the Fed, you would think that NYCB’s ability to borrow in the future will be reduced substantially.
CODI-B had a bad moment this morning when it printed 22.26 on big volume, then recovered immediately. I’m thinking stops were run. CODI price unaffected.
Yeah looked like a fat finger trade or a badly sized market order that blew thru stops. I actually got hit on a stink bid… But in the 23s… Think this is a decent preferred. Insiders have been recently pretty active buying the common stock as well.
Treasury & Mortgage Rates Popping Again…
10yr T~ up 19bp…4.05%
30yr Fixed Mortgage ~ up 29bp…6.92%
15yr Fixed Mortgage ~ up 30bp…6.25%
FedWatch Tool ~ March rate cut probability way down…19%
US Non-Farm payroll ~ way up…353K vs 180K est.
RWTN now trading. Offered at 25.10. I like RITM-A better, higher rate but no redemption date.
I see now, Kid Twist posted this news in Sandbox, earlier this morning.
CHTR, LBRDA, (and LBRDP) down big on CHTRs disappointing Q4:
LBRDA down almost 14%
CHTR down almost 13%
LBRDP down almost 3%
Shares of Charter Communications fell after the cable company reported a drop in quarterly earnings and said it lost internet customers in the last three months of 2023.
The stock was down over 12% in recent trading, on track for its lowest close since June. Through Thursday’s close, its shares had fallen about 6% over the past 12 months.
Charter said it lost 61,000 internet customers in the fourth quarter, with nearly all of the decline from residential customers. Analysts expected the company to add customers.
Charter on Friday also reported fourth-quarter earnings of $7.69 a share, below the $8.76 a share expected by analysts surveyed by FactSet.
TRINL from FIDO
Trinity Capital Receives Investment Grade Rating from Morningstar DBRS…
Morningstar DBRS also assigned an investment grade credit rating of “BBB (low)” to the Company’s long-term senior debt.
Picked up some FHN-D today. It closed at 24.40. It’s a FtF with its first call date on May 1st.
If they call it then, you get $25.7625 per share (dividends are paid semi-annually), for a pretty sweet IRR of nearly 25%.
If they don’t call it, you get a floater paying 3m SOFR + 3.859% + 0.26%.
This appears to be a pretty conservatively run Southeastern bank (you might remember it as TD’s partner in an aborted merger) with good capital ratios but DYODD of course.
Comparably look at CFG-D – a little bit better coupon, a little bit better rated, a little bit shorter period of time to the first call/float date, a little bit cheaper closing price today, but it’s +3.642 v FHN-D’s +3.859%…. other negative right now is CFG seems to make the lists of banks with relatively high CME exposure.
Yeah, but I think the FHN-D only pays twice a year, so you will get a six month dividend in May vs. 3 mo dividend in April for CFG-D IIRC.
FHN is the old First Tennessee bank. That was a really stupid rebranding. Everyone knew First Tennessee due to decades of goodwil/advertising and they matched colors with the home state team to the point where they were kind of synonymous. Whereas I had to ask my wife who First Horizon was just today since I could not remember if that was what they rebranded to or not.
RF-B is the one I loaded up on back when its price was down. I picked up a few more when it hit $24 today. Regions is the old Union Planters Bank, which is one of the first contracts I signed when I started my own business many moons ago.
Ahah! I see… Thanks for pointing out that FHN-D is semi-annual…. important wrinkle…
Scott, You are 100% on target. We generational TN folks identified and liked First TN. I have friends in Memphis that told me consultants came in and told them to change name for expansion or potential sell. Last quarter results were good. I have shared before I am buying the commons of our southeastern banks. The big guys ignored this region and now must play catch up. I recall during the spring banking crisis CNBC stating that the SE regional depositors were not as “sophisticated” as the CA and NY troubled banks. Best thing I could have heard. I am laughing on the way to the bank while that fool is W-2 dependent with tax! Frankly, I hope our banks don’t sell out as the population growth is enough to increase value. A CA bank entered the Nashville market (many moving there) and has struggled!
sorry for the rant but we unsophisticated investors thank CNBC.
Those are some good ones to look at, thank you both.
I also bought CFG-D. Yesterday I actually swapped my FHN-D for FHN-B.
B begins floating on 8/1/25, so D will give 5 floating divs before B starts floating.
For 1 more div, I get ~70 bps better div with B, and then for 5 divs, D will have a much better yield. Once they both float, B will have a notably better yield since it has the better spread (4.262% v 3.859% for D), and so the better coupon. Add to that my lower cost (sold D for 24.30 and paid 23.40 for B) which magnifies my gain in yield.
I figure with D floating 15 months before B, D will appreciate in price sooner, so I’m giving up:
1. price upside to par (from 24.30) happening sooner, and
2. 5 divs with much better yields.
In return, I get
1. more price upside to par (from 23.40) later on, and
2. noticeably better div yields staring 8/1/25.
By the way, acc. to each one’s prospectus, once B and D begin floating, they’ll move from their current 2 divs per year to a 4 div per year schedule.
I apologize if this is a repeat, but on Jan. 23, 2024, CFG filed a form 8-K with the SEC for $1.25B of 5.841% fixed/floating rate senior notes. The Company intends to use the net proceeds of the Offering for “general corporate purposes, which may include securities repurchase programs, dividend payments, capital expenditures, working capital, repayment or reduction of long-term and short-term debt, redemption of outstanding long-term debt, short-term debt and PREFERRED EQUITY SECURITIES, investing in, or extending credit to, our subsidiaries, and the financing of acquisitions.”
CFG has 2 preferreds (D and E), and only D is callable in the near future when it floats at 3.642% + SOFR + 0.26% (about 9.2%) on April 6, 2024. It isn’t likely that they will allow it to float. Therefore, I’m betting on redemption. Current price is $24.30 and they will pay 1 div. at $0.39 for a total capital/div gain of about $1.09 = 4.5% in 9 weeks. There are 12M shares outstanding, so it will cost about $300M to redeem, leaving them with $900M for other purposes.
CFG has a 1000 structure perpetual FTF current coupon 8.59 (3msfr + 326) currently callable (300 mil size) trading ~ 95 fwiw. Cusip 174610AP0
Catching falling knives……
After the initial shock
NYCBPRA down an additional 7%
ADM up 7%
Buy more – Hold – Sell?
Risky business
Hmmm. NYCBPRA now off over 10% today and yielding almost 8%,! Beginning to get interesting. The question is do I care to own another bank equity? Own CUBI E and that’s all in my portfolio. Guess I will go lay down and think about this one.
I want 300-400 shares. I had a bid open at 17.50 which got a fill but 17.20 did not. Still sitting there. Once 17.20 hits I think I am done with right around 300 shares. That seems like an ok position to bring in right around 400-500 a year in divs. It can blow up, go to zero, kaput, and yea.. it might sting a bit but that is about all I can do with it. Too much risk to jump in with bigger money. That is how I see it.
Right now people are fearful. Think all office space is created equal. That doom is upon us. NYCB appears to have decided this is the quarter to clean up. Naturally nobody wanted to see that and the reaction is over the top. We have the little guys out in force dumping shares along with whatever institutions. Makes for some serious moves.
Here is a CNBC guy (Josh Brown) explaining why he bought NYCB:https://x.com/HalftimeReport/status/1753108785256898646?s=20
I agree with Josh and have today taken positions in both the NYCB.A and NYCB.U. My family and I have been traveling through Europe with my institutional Money Manager buddy and his family. He told me he’s intimately familiar with NYCB, there management and was starting a position in the equity last night. I am primarily going in because of his analysis and acumen. His track record has been exceptional for many years, but of course he could be mistaken. Please do your own deep due diligence as you alone are responsible for the risk and rewards in your portfolio. I will be flying back to the states through NY next week and plan on stopping by NYCB’s branches and corporate headquarters to see if I can get any additional information and data details. Wishing everyone profitable trading, I am Azure
NYCB-A YTC = 16.6% at 19!
And oh, BTW, it’s highly likely to be called given the language in the prospectus indicates it will be set to a fixed rate using June 2023 LIBOR.
Maine,
I see nothing in the prospectus that requires use of June 2023 LIBOR. Where are you reading that?
“If fewer than three banks selected by us and identified to the calculation agent to provide quotations are quoting as described above, Three-month LIBOR with respect to that floating rate period will be the Three-month LIBOR in effect for the prior floating rate period or, in the case of the first floating rate period, the most recent rate that could have been determined had the floating rate period been applicable prior to first floating rate period. The calculation agent’s determination of Three-month LIBOR for each floating rate period and the calculation of the amount of dividends for each dividend period will be final and binding in the absence of manifest error.”
I wonder if the “most recent rate that could have been determined” is the key. That would be the last report of 3m libor? Or some variation of that on a certain date.
“1-, 3- and 6-month US dollar LIBOR settings will continue to be published using a synthetic methodology until September 2024. The US dollar LIBOR bank panel ended on the 30 June 2023. This was the last remaining LIBOR panel.”
Fc, you got it!
Step right up to the table, place your bets.
https://x.com/lastcallcnbc/status/1753221937151586608?s=46&t=3Y9i1Va5ZzPQa4_CnI-nfg
If you’re going to be visiting NYCB’s corporate offices be sure to ask them about the $500M increase to their loan loss provisions from Q3 to Q4, which according to news reports was due to just two commercial loans.
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
My SBNYP position is still holding on to $4.00 according to Merrill Lynch. Wish I could sell it. 🙁
I am sticking with National Banks from now on – no more Regionals or Communities for me.
Hi Westie, The non-cumulative is a concern but from what I read NYCB made the dividend cut to build bank assets to meet more stringent asset and liquidity requirements of being a bigger bank after acquiring Signature Bank. Once they meet the higher asset requirements required to be a bigger bank, maybe they will increase their 5 cent common dividend. I don’t know. I am holding for now.
I just got done reading the transcript and saw Tom’s post. The very last question discussed the dividend cut more closely. So what Tom said matches what Tom said. chuckle.
(Keep in mind that voice to text can be flawed. You have to assume a word can be incorrect but normally a person can figure it out).
“Jon Arfstrom
Hey, thanks for sneaking me in. Just two questions. Two important questions, I think. There’s some confusion on this, but did the dividend reduction have anything to do with your outlook for credit? Or was it more about looking peer like and adjusting for the new earnings run rate?
Thomas Cangemi
Great question. Let me be crystal clear on this. This is laser focused on looking at the company’s long-term plan and being part of a new category for banking institutions and having a capital position as we grow it into a level that we’re in our peer group. And clearly the dividend significantly increases that capital position in 2024 and beyond. When you take all of the factors that we talked about between forward guidance and dividend adjustment, we get our CET1 to double digit. That is primarily focused on the rationale there, as well as thinking about the future growth of this company as a Category IV bank. And there’s no question that this was a difficult decision as a firm, but clearly necessary as we reestablished our capital allocation story.
Jon Arfstrom
So really not it’s more about the latter. It’s not about your outlook for credit, is what you’re saying?
Thomas Cangemi
Yes.”
Tom:
The biggest concern now with the stock approaching $5/share is a run on deposits due to confidence in the bank, whether justified or not. It doesn’t really matter how good the management team appears to be.
With a large bank run that preferred and baby bond could be vaporized. Certainly hope it doesn’t happen, but an 8.5%+ yield is no way near enough of an incentive for me with the risk of being completely wiped out.
But I hope everyone on this site who buys these securities does extremely well on them.
Just throwing this out there. Not all deposits are the same. You are probably thinking of some large institutional accounts that 4 or 5 of them yank their money they take a big hit. According to the transcript they are not heavy in that type of deposits compared to the recent past blow up banks. I don’t think a bank run is a huge worry. It was never the normal biz and mom and pops causing all the chaos. It was the big institutions saying enmasse we are leaving.
“John Pinto
Yeah. When you look at some of those uninsured deposits they’re not all institutional by any stretch; there’s customers in there, there’s businesses in there so that’s not the escrow or entirely large balance institutional deposits. If you look at the organizations we had some of those balances from a 15c3 and that type of money, those types of business institutional type accounts. We don’t have a lot of those deposits at all anymore. I mean, that deposit base that’s uninsured is primarily business type deposits and operating accounts and…”
I found more buys this morning ; most of the regional preferreds took a big hit early ; SNVpD and VLYPO ; both floaters and current yields over 9% ; VLYPO @22.75 and SNVpD @24.38
Another bad morning for the regional banks. If you liked NYCB-A at twenty bucks yesterday, you’ve got another chance at it.
Actually I had been flipping the U then it went too high and wasn’t falling. Another opportunity to buy low sell high?
Picked up some more below 20. With that said I am only at 200ish shares so it shows my lack of commitment to building a position aggressively. Just toss in the bucket and not worry too much. Below 19 I will probably buy another slug which might happen today.
I feel bad for chatting so much in the READER ALERT area but below 19 took all of a few seconds after I posted. I bought another slug at 18.3x something. I will buy more below 18. Not even at 250 shares yet. Big spender here today! Gives me something to do.
We are below 18. I got a fill at 17.50.
ATLCZ showing trades at FIDO…
I must’ve been Rip Van Winkle on this one
Hi Folks – just a note that RILY called the bulk of their May 2024 notes. I had about 75% of my positon called. An interest payment was made today as will. Both the interest payment and principal from the early call were credited to my account today.
According to the RILY press this early call was the result of a covenant in one of their credit lines. Evidently this issue could only have $25M par value outstanding 91 days before maturity.
Interestingly – this week there has also been an options related squeeze in the common. This is a heavily shorted stock and there is a lot swirling around the name.
“J” posted about the partial redemption several days ago. It was estimated to be 82%, based on my notice and math it was 78.6%.
thanks FL! So in typical RILY fashion… 75% of my position in the May 2024 bonds was called yesterday. So I should have cash in my account right? Wrong.
It will sit in some kind limbo security not earning interest unitl 2/29 at which time the amount is credited to the account. Nice way to get 29 days of 0% intrest loan for RILY!
I had another issue called yesterday it was a Credit Suisse 7.125% 2025 issue. Cash was credited to my account that is being reinvested today.
RILY is certainly unique… in many respects.
The original announcement said it would be called on Feb 29, so shouldn’t it accrue its normal interest until then? Why would it stop early? Some brokers commonly freeze securities that are called but they still get the full payout.
Thanks Irish – re reading the press release isee that this is the case. It is still strange, however.
A lot of these partial calls need to be announced 30 days in advance, its often mentioned in the prospectus, I have watched it happen in several other bonds/preferreds as well. They almost always accrue interest while this is happening. You will get a small interest payment for the month of February.
Here is the RILY press release about the partial call https://www.prnewswire.com/news-releases/b-riley-financial-announces-partial-redemption-of-6-75-senior-notes-due-2024–302047541.html
I had calculated the fraction to be 82.2%, but in fact they called 82.0% of my shares.
Does anyone know if similar covenants apply to RILYM and RILYK? That would add a new wrinkle to my YTM spreadsheet.
The called shares are only preliminary. There will likely be another lottery right before 2/28 to reassign shares that may have been selected originally but were sold prior to 2/28.
Post Fed talk today…
CME FedWatch Tool ~ probability for March rate cut dropped to 35.5%
EBGEF –
News Release Issued: Jan 31, 2024 (4:15pm EST)
To view this release online and get more information about Enbridge Inc. visit: http://www.enbridge.com/media-center/news
Enbridge Provides Notice of Series 5 Preferred Shares Conversion Right and Announces Reset Dividend Rates
CALGARY, AB, Jan. 31, 2024 /CNW/ – Enbridge Inc. (TSX: ENB) (NYSE: ENB) (Enbridge or the Company) announced today that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series 5 (Series 5 Shares) (TSX: ENB.PF.V) on March 1, 2024. As a result, subject to certain conditions, the holders of the Series 5 Shares have the right to convert all or part of their Series 5 Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series 6 of Enbridge (Series 6 Shares) on March 1, 2024. Holders who do not exercise their right to convert their Series 5 Shares into Series 6 Shares will retain their Series 5 Shares.
The foregoing conversion right is subject to the conditions that: (i) if Enbridge determines that there would be less than 1,000,000 Series 5 Shares outstanding after March 1, 2024, then all remaining Series 5 Shares will automatically be converted into Series 6 Shares on a one-for-one basis on March 1, 2024; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series 6 Shares outstanding after March 1, 2024, no Series 5 Shares will be converted into Series 6 Shares. There are currently 8,000,000 Series 5 Shares outstanding.
With respect to any Series 5 Shares that remain outstanding after March 1, 2024, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The new annual dividend rate applicable to the Series 5 Shares for the five-year period commencing on March 1, 2024 to, but excluding, March 1, 2029 will be 6.683 percent, being equal to the five-year United States Treasury bond yield of 3.863 percent determined as of today plus 2.82 percent in accordance with the terms of the Series 5 Shares.
With respect to any Series 6 Shares that may be issued on March 1, 2024, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The dividend rate applicable to the Series 6 Shares for the three-month floating rate period commencing on March 1, 2024 to, but excluding, June 1, 2024 will be 2.05869 percent, based on the annual rate on three month United States Government treasury bills for the most recent treasury bills auction of 5.37 percent plus 2.82 percent in accordance with the terms of the Series 6 Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.
Beneficial holders of Series 5 Shares who wish to exercise their right of conversion during the conversion period, which runs from January 31, 2024 until 5:00 p.m. (EST) on February 15, 2024, should communicate as soon as possible with their broker or other intermediary for more information. It is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary time to complete the necessary steps. Any notices received after this deadline will not be valid.
BTW, there seems to be a missprint in this release regarding what the floating rate terms should be if one elects to convert to Ser 6 and enough votes get cast… I’ve asked for an explanation;
“The dividend rate applicable to the Series 6 Shares for the three-month floating rate period commencing on March 1, 2024 to, but excluding, June 1, 2024 will be [2.05869 percent], based on the annual rate on three month United States Government treasury bills for the most recent treasury bills auction of 5.37 percent plus 2.82 percent in accordance with the terms of the Series 6 Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.”
Shouldn’t that read 8.19%, NOT 2.05869%?
There was another issue reported today by ENB where the language would seem to corroborate that this isn’t right – https://www.enbridge.com/media-center/news/details?id=123798&lang=en
FWIW along with IR’s very quick response I think I’ve figured this out… It is not a misprint but they are arriving at the same approximate number but stated differently than the way I’m used to…. If the Ser 6 come into existence, its first payment on 6/1/24 will be 2.05869% of the liquidation preference amount of $25.00. That’s $0.51467/share which, after taking into account the exact number of days in the quarter constitutes 1/4 of 8.19%. So the choice is to stay with the reset Ser 5 that will be locked into 6.683% coupon for the next 5 years, OR to vote to convert to Ser 6 which will float quarterly based on the 3month US Treas rate + 2.82…… That’s quite a short term advantage (over 150 basis points) in favor of going for Ser 6 given it will pay so much more than Ser 5 initially, but eventually, the yield curve will normalize and the scale will flip in favor of Ser 5…. Personally, I think I’ll vote for Ser 6, but I have my doubts it will get created…..
Should this be in the Canadian section? Since EBGEF is USD denominated although a Canadian company, I think it works here… Any opinions?
2WR I thank you for posting it here. I guess you have to look at this in a couple ways. Historically and currently. The problem is the best information we can rely on is in the rear view mirror. Seems 3 month historically has been higher than 5 yr but currently Powell is saying he is going to hold rates higher for longer. Then things are not normal now and with the US debt people are saying rates may or should stay higher because of the risk with all the debt.
One thing, going with the shorter 3 month term ( reset ) wouldn’t the share price be more volatile? What to do?
Charles – I would think the exact opposite – the 3 month reset term would be less volatile…. Think of how all F/F floaters seem to act right now, least those that actively float right now….. This would be no different other than the base would be the 3 month Treas instead of 3 month SOFR….. With the rate changing every 3 month instead of every 5 years, in a way what you’d be doing is buying into what would act as a shorter duration piece of paper than the 5 yr reset, which of course would lower volatility while at least in the short term also increase income.
Is this something my broker will ask what I want to do, or do I need to actively call them? I have it at Merrill
Irish, I wondered the same thing. have to keep an eye on account alerts I would think. I liked TD for that.
Don’t rely on my memory please but I have either owned EBGEF for over 5 years or gone thru this conversion on one of their other issues and I don’t remember having to do anything – was notified to vote by TDA…
2wr, thanks much for the original post.
The rate for the new Ser 6 does seem compelling, but I bought Ser 5 instead, at 22.04: choosing to lock in 7.58% purch yield for 5yrs (if it doesn’t get converted to Ser 6) vs floating down from 8.23% in an environment of falling rates.
I expect you saw that two other rate resets/conversions also were announced yesterday (https://www.enbridge.com/media-center/news), on CAD-traded issues:
– existing Ser 7 (new rate 5.988%, eff yield 7.9% at current price of CAD18.95) can convert to Ser 8 (coupon 7.64% for the first 3 months)
– existing Ser P (new rate 5.918%, eff yield 7.9% at current price of CAD18.72) can convert to Ser Q (coupon 7.57% for the first 3 months)
Bur – I saw the 7 announcement but I think I ignored the others…. Don’t forget it’s not a choice to buy 5 or 6 right now, same for 7 vs 8….. It’s an option for shareholders to elect to convert to and create either ONLY IF enough holders vote to convert…. So it’s possible, nay probable, neither 6 or 8 will exist. This ability to vote I think comes with each reset rate preferred ENB has upon resetting and I don’t think it’s frequently implemented at least not in the most recent past. Canadians seem to be more comfortable with and more used to resets than floaters so there is that bias as well.
Comparing the current yields of the three USD denominated Enbridge preferreds. Closing prices are for 2/1/2024. The EBGEF rate numbers are for the March 1 reset rate. I think ex-div for all three is Feb 14.
(symbol, close, reset rate, CY, next reset)
EBBNF 20.19 5.858% 7.254% until 9/1/2027
EBBGF 21.63 6.704% 7.748% until 6/1/2028
EBGEF 21.86 6.683% 7.643% until 3/1/2029
NYCB !! oopsies… cut div to .05/q, big loss shares tanking. Glad I sold the pfd U a while ago.. a darling of Seeking Alpha for sure.. hmm.. of course a common div cut makes the pfd div more ‘secure’ in theory but we’ll have to see how this plays out. wow. Shockwaves through the banking system on this? or ‘prudent’ clean up and capital protection. Shame. Bea https://www.marketwatch.com/story/new-york-community-bancorp-stock-falls-after-swinging-to-a-loss-cutting-dividend-fafd15c4
Thanks Bea – 2 big loans for over $500 million going bad–I know these are out there–been looking for them.
Contrarian view on NYCB
NYCB took over the Signature assets backed by FDIC support.
I see the 12/31 results as a house cleaning – writing off all the garbage.
In my experience, this kind of “deck clearing” is more than required, not less, so future results will look even better.
Don’t forget – this is the FDIC’s “baby.”
I bought at $19.50
We’ll see.
I will admit still on first cup of tea this morning and I am tending to agree with Westie. It appears loan loss provisioning is a big culprit due to them reaching a new larger size. Cutting the div allows them to build up cash and solidify their new position in the world. Still paying a common dividend is a great sign for the preferred. I will read more later after my meetings.
I am leaning that way and voted with my $.
If recall correctly, Whalen is a fan of NYCB, and he tends to be bank bearish.
https://www.theinstitutionalriskanalyst.com/post/winners-losers-in-the-new-gilded-age
They have hard maturity in ’28 FTF 1000 structure security quoted today ~95 down from 99ish. Current coupon 8.43 (3m sofr +304) …very illiquid. cusip 649445ac7 fwiw
What about NYCB-A the 6.375% coupon Fix to Float ? It is down a nice 14%+ to $20s from high $23s past month.
If they are still paying dividend on common means this preferred gets paid too though it is non-cumulative.
Getting more probably there will be another round of smaller banks getting hammered and the survivors may be opportunistic.
Could be or maybe not. Who knows, but my WAFDP and AUB-A have popped a lot lately, and fortunately after I bought more on top of what I had. So it was time to say goodbye! No banks left for me, but they were good to me. A financial advisor would lose his license for having someone in a portfolio allocation like I have.
Grid, Tim..yes the losses in comm r/e reveal in odd ways hopefully contained I am not convinced. To me there is a lot of mark to market that needs to go on. Now a Japanese bank ‘bitten’ by r/e. I have STT-D probably called soon and will be glad to be out of them all as well, but to each their own. Bea https://finance.yahoo.com/news/us-property-losses-trigger-20-014351477.html#:~:text=The%20bank%20announced%20that%20it%20expects%20to%20post,estate%20and%20losses%20on%20sales%20of%20foreign%20bonds.
Bea, Im too old to learn how to be bank analyst, and they seem to get blind sided just as much. WAFD dropped 5% today and its preferred jumped 5% today. Bye bye it went. I dont need 7% from a bank preferred when I can get 6.2% from an IG ute.
Grid and Bea:
Not all bank preferreds are toxic now. From reading some of these comments it seems many readers on this site have now blown out of all their banking preferreds.
My allocation to this sector remains very small (1% of my portfolio), but the one I own continues to do very well (SLMBP). A tremendous performer and a great one to own if you believe in the “higher for longer” theory on rates. Still a 10.5% yielder even at $70/share, and there are no worries about office or multifamily loan exposure with SLM.
And I am thinking of getting back into BANC+F now near a 9% yield, as this bank has already been recapitalized, just posted a good quarter, and should realize EPS growth from the PACW merger. I got out of this one when it zoomed past $24 in December.
Good luck to all!
i think its a reasonable speculation at 8% yield. around 20
I am up to 160 shares purchased of NYCB-A. I am not chasing it. Just put some layering of small orders lower and lower and some are getting fills. Does not seem like my orders under 20 are getting any bites. I might be done for today. I was a bit late to the game to catch the cheapest shares. On the flip side I do not really see myself wanting a 1000 shares of this. Just a taste.
In several big companies where I worked, if we were going to have a bad quarter, we would search for all the garbage we could find to write off/down so that subsequent quarters would look better (to quote a CFO I worked with, “If you are going to s&$* the bed anyway, you might as well fill it up…”) .
Did some crazy things (sale/leasebacks of entire factories of equipment and of whole facilities – you name it). Biggest challenge (usually) was getting the accountants to go along. “Selling” those deals internally to the accountants got me the label of “the world’s worst accountant” by the CFO and the lead outside accountant (PWC) – a badge I wore with honor, because (a) I am not an accountant (and never claimed to be), and (b) I usually got them to go along, in the end.
Corporate accounting is just a puzzle. Once you understand the rules, you can usually find a way around them if you work backwards from the result you want (which is blasphemy to many junior accountants).
Private, you are correct. A lot of leeway in GAAP. I remember taking a graduate accounting course back in the day (Im not an accountant either) where the teacher first day put up 2 income statements on chalkboard from Company A and Company B. A showed a profit of $1 million and B showed a $1 million loss and he asked us which company would we want to own. He asked which company would we want to own. Of course he tricked us. It was the same exact company, both with legal GAAP accounting. Then he went into discussing the “art” of accounting.
@Private @GB
“In several big companies where I worked, if we were going to have a bad quarter, we would search for all the garbage we could find to write off/down so that subsequent quarters would look better (to quote a CFO I worked with, “If you are going to s&$* the bed anyway, you might as well fill it up…”) . ”
This is called “Big Bath” in finance.
BTW never send an accountant to do a finance major’s job.
https://www.investopedia.com/terms/b/bigbath.asp
As usual the ratings agencies were on top of this. Moody’s today issued:
http://tinyurl.com/42uzdmk2
Ashford Hospitality Trust Stock Jumps 32% on Plans To Sell Hotels. Shares of Ashford Hospitality Trust were higher after the real estate investment trust said it plans to sell enough of its hotels to pay off debt coming due at the start of 2026.
https://www.marketwatch.com/story/ashford-hospitality-trust-stock-jumps-32-on-plans-to-sell-hotels-1be008c0?mod=markets#:~:text=Ashford%20Hospitality%20Trust%20Stock%20Jumps%2032%25%20on%20Plans%20To%20Sell%20Hotels,-Published%3A%20Jan.&text=Shares%20of%20Ashford%20Hospitality%20Trust,to%20%241.78%20in%20morning%20trading.
Well it always happens after and never before….
NY Community Bancorp Faces Moody’s Downgrade Over Risks From Real Estate
https://www.bnnbloomberg.ca/ny-community-bancorp-faces-moody-s-downgrade-over-risks-from-real-estate-1.2029209
Edit, sorry Wanda I just seen you previously posted. If you can get this link opened up its a real nasty article below. I can read the entire thing through my Yahoo finance app, but cant link it from there, so I can only link this from ‘net.
https://www.bloomberg.com/news/articles/2024-01-31/nycb-plunge-flashes-a-560-billion-real-estate-warning-for-banks
NuStar takeover topic… Re NS-A and NSS . . . any holders know of how existing Preferred & NSS holders will be taken out …. Cash or Exchange of New Securities ????
Will the above NuStar holders have option to have securities retired for Cash OR is an exchange of securities required ??
Thanks
Jim ; I hold all the NS series ; A B C , NSS;
they are all “pinned to Par” ; SUN is raising funds sufficient to redeem them all; and that’s what I’de expect; my strategy is keep them and earn the outsized rates and accept the calls when they come.
I bought the new STT-I issue at Schwab @ $100.415. I’m not clear if it’s a preferred issued or not. It’s described as a subordinated debenture. It does pay quarterly and most bond $1000 issues pay 2x a year. YTC = 6.60% Anyone have an opinion or exact knowledge? Thanks.
https://www.streetinsider.com/SEC+Filings/Form+FWP+STATE+STREET+CORP+Filed+by%3A+STATE+STREET+CORP/22669973.html
Was able to buy at Schwab for $99.50/share. 6.73% yield. Had to place the order through the bond desk by phone. Cusip 857477CH4
i was able to pick up the new STT preferred on merrill with the help of a broker on the secondary market at 101.35
What yield is that??
i am confused – are there two issues with regard to STT? A bond (Cusip 857477CH4) and also a new preferred offering? Sorry if I am missing something.
There is a new preferred issue out that is not the normal 25 type. I think they are 1000s broken up into 100s. I was confused also. You will probably have to call the bond desk to get action on it as it won’t be traded with a normal ticker symbol. And yea.. it is a preferred share. Not a bond. I was briefly looking at the prospectus the other day.
I think the above information is correct.
CME FedWatch Tool ~ probability of March 2024 rate cut down to 39%
MMFs today…
VUSXX ~ 5.30%
VMRXX ~ 5.30%
VMFXX ~ 5.29%
SWVXX ~ 5.23%
SNSXX ~ 5.04%
SNOXX ~ 5.03%
SPAXX ~ 4.98%
FRGXX ~ 5.26% 🙂
talkdollars…
Looks like FRGXX is “institutional class”, needing 10M investment
anyone interested WHR is on Blue light special this morning.
6.34% yield
New Earnings estimate $13-$15, take the middle of that current PE 7.88
a.m. trade down ~6%
Thanks pp for the added color. Major US manufacturer I don’t care even if we are headed into a recession and people are cutting back on their spending habits. Your stove goes out or the refrigerator and the washer and dryer you have no choice but to replace it. I’ve been through the experience of buying used and someone else’s junk messing up the lino and the door jamb hauling them in or out and I have paid numerous house calls to fix stuff. In the end I end up going out and buying new even if I have to do it on credit.
Just a feeling, I could be wrong, but think WHR needs to approach their low (~$98) before I’d take a bite. But I share your view of the company and definately going to be watching this one.
PP, you may be right but Chuck Caravale who I respect very much and I believe was the inventor of Fast Graphs had this to say many moons ago.
https://seekingalpha.com/article/4211051-whirlpool-corporation-you-guts-to-be-greedy-while-others-are-fearful
I know it doesn’t mean anything when you’re looking in the rear view mirror, but you have to start somewhere and I am willing to average down.
RILYO partial redemption (~82% of the issue)
https://ir.brileyfin.com/2024-01-30-B-Riley-Financial-Announces-Partial-Redemption-of-6-75-Senior-Notes-due-2024
Talk of my demise are greatly exaggerated
RILY shorts and Gary Gensler were unavailable for comment. 😉
I’m debating how much of my RILYO proceeds I want to roll into RILYM. I either had forgotten or had not seen the provision that the notes now need to be redeemed 91 days early. By that math, the majority of RILYM will need to be redeemed around November 30th, and another redemption notice should be issued by Oct 30th. That’s another very nice yield to call.
ECCF can now be bought (morning, 01/30/2024) online at Schwab.
Evening, January 29th
Anyone else notice the tone of recent posts?
Excited, bordering on the incredulous, everything doing so well…….
Almost all holdings showing green.
Some shockingly so.
Definitely worrisome.
Too good to be true.
Westie, You have your chair already picked out when the music quits?
Charles
Yup.
For better or worse, I am typed as a Value investor.
Value has done poorly in recent years – only in 2022 did it outperform Growth.
Growth has TROUNCED Value over the last 14 months.
My chair is the Value chair – Cash and liquid securities (T Bills)
When/if the black swan arrives, I’ll be ready to purchase Value opportunities.
As we did with ADM..
Even a stopped clock is correct twice a day.
Westie, I cashed out on several today. JXN prA I held a total of exactly 20 days bought at 25.10 and sold at 27.21 I would be crazy not to I decided. Hadn’t even collected a dividend on it yet. Would have taken 1-1/2 yrs to collect the same income from the dividend. I also sold the ADM for about $3.00 a share profit for holding for 5 days. I sold my LXP prC for $1.00 in profit and 3 qtrs of dividends last Thurs.
The market is looking too Goldilocks to me.
you remind me of my dear departed mother , a chronic worrier; she would say “I’m so worried ” and ide say about what ? “worried that I don’t have anything to worry about” !
STT-I
Anyone know when the new State Street preferred will start trading and if so what the temp symbol will be?
Thank you
CUSIP 857477CH4, no listing.
Fidelity shows it started trading 1/24.
Daily trade summary from Schwab. Did a search by Cusip (no known symbol)
Trade Date Click to sort in ascending order High Low High Low Price Yield Trade Count
01/29/2024 102.950 100.125 0.000 0.000 102.450 0.000 309
01/26/2024 102.950 100.240 0.000 0.000 100.376 0.000 204
01/25/2024 102.950 100.050 0.000 0.000 100.500 0.000 837
01/24/2024 100.938 100.000 0.000 0.000 100.220 0.000 325
Schwab will not allow you to enter a buy for this cusip either.
1/30 @ 10:00 vanguard says this is a special situation, whatever that means, and they will not have it for trading. At first the broker said he thought it might be institutional only.