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1,499 thoughts on “READER INITIATED ALERTS”

    1. This is of interest to me. Odd though in that it appear to only float for one year at the end.

    2. Looks interesting. Not sure if these would be IG. Most of HSBC paper was in the past. 10 years at 8+% sounds too good to be true??

    3. RE -HSBC – “The Notes will be issued only in registered form in minimum denominations of $200,000 and in integral multiples of $1,000 in excess thereof.”

      1. What do they mean by “in registered form?”

        That minimum is a bit much. Too bad III doesn’t have an investing collective to hold things like that jointly. I could chip in a $100 or so ;o)

        And thanks 2WR for saving part of my weekend now that I don’t have to sit down to look through it.

    4. player4, hi there do you see a CUSIP?
      Have an incredible and memorable weekend, Azure

  1. Yesterday, NuStar declared:
    (a) the divs on NS-A, NS-B and NS-C.
    (b) the date of their quarterly conference call – November 3rd at 9 AM CMT.

    For the -A and -B preferreds, I calculate the LIBOR rate in effect as ~3.4834%.
    For NS-C, this is the final dividend at the 9% rate. It begins floating (unless redeemed) on 12/15/2022.

    NS-A NS-B NS-C
    Quarterly amnt $0.64059 $0.5704 $0.5625
    Annual amnt $2.56236 $2.2816 $2.25
    Par $25.00 $25.00 $25.00
    Annual rate $0.10249 $0.09126 $0.09
    less: Spread 6.76600% 5.64300%
    = Libor rate 3.48344% 3.48340%
    Record Date 12/1/22
    Pay Date 12/15/22

    1. Speaking of MLPs, ET recently announced its 3rd straight quarterly increase of 15%. They are widely expected to increase another 15% next quarter, on their way back to $1.22 annually, where they were before their pandemic cut.

      At today’s price, that would be almost a 10% tax-deferred yield by next Feb. Plus, ET is one of the cheapest MLPs on a price/cash flow basis.

      Of course, there is that dreaded (by many) K-1 at tax time, and ET’s is one of the more complicated I receive. Still, it’s doable fairly painlessly with TurboTax and well worth the effort to me.

      Disclosure: ET is my 4th largest MLP holding, behind EPD, CEQP, MMP, and MPLX.


      1. MLPs are ridiculously out of favor with investors today. I am not sure why considering the advantages they have. I went with EPD, MMP, MPLX, and ET. I even successfully sold calls on them multiple times now but currently have none left open. I am not in the mood for them to get called away at this stage. Undervalued. Need a good run up before I try that again. My FENY might get called away though but I am ok with that 140% gain on it. Timing wise it may be time to let that go but tax wise it is very different then MLPs.

        I also use turbotax for tax time. Not exactly fun but it gets the job done and remembers the history of it. An investor does not need to go all in on these names. Just a comfortable position to create a diversified income stream. Another tool in the shed.

      2. JMO
        I hold the same range of MLPs that you do . But with ET you also have to consider that KW is the largest insider shareholder and that over a longer time frame his actions have been less than shareholder friendly. So the real issue is, has he mellowed or are the people around him now better able to use more restrained ways of dealing with some of his impulses. I for one do not know the answer and most of the analysts who cover the stock fail to even mention this issue. Time will tell and I wish you luck. SC

  2. Anyone?
    Flagstar/NYCB merger in the works.

    Question: Do they have to call the issues or not?

    NYCB-A and NYCB-U preferred.
    I have about 1,000 shs each.

    1. Newman , last post before I am off to work. NYCB has tried several times to expand and last deal fell though. This one I think has been talked about for a while. Without research I think its NYCB doing the take over so see no reason for them to call their preferred. But check to see if Flagstar has any preferred outstanding. Might be money to be made there.

  3. PS Business preferreds trading/hovering new lows $12s – Yields now over 10%
    X, Y, Z
    And these are cumulative! Anyone with latest insight or buying here?

    1. Nibbling at X. From the agreement:

      PSB’s three outstanding series of preferred stock, and associated depositary shares, will remain outstanding in accordance with their terms following the closing. We currently intend to continue to have the depositary shares representing our preferred stock listed on the NYSE with public reporting so long as there is at least $75 million aggregate liquidation value of preferred stock outstanding.

    2. theta, Kind of reminds me, rhymes with, BAMs take over of ALIN when all of the common were bot by Blackstone. Like you say…are cumulative.
      Me out right now, moving further away from specs.

      1. Joel A. Right. I am really tempted to put on a big position here and just treat as if it was an immediate income annuity. This is a good opportunity here as clearly there are other entities who for whatever motivation are force selling out. Reminds me of Ocean Spray before it went dark. Picked up a bunch so cheap with ridiculous yield.

  4. PTEN doubling the div, if you followed insiders in march 2020 you’re sitting on a 16% yielding cost basis drilling play.

  5. Liberty Broadband Corporation – Series A (LBRDP) is down again near 52 week low ($21.85), stripped yield is above 8%. Very little information about this issue on QOL but Tim or someone else mentioned that it is investment grade with qualified dividend. I have a full position in this issue.

    1. This is related to my earlier comment about LBRDP. I posted wrongly that someone mentioned that it is investment grade; it is not. Just old brain.

      1. MFZ, There has been a big seller out today. Over 7000 unhidden shares have been shown on the ask side all day. I rarely disagree with Tim, but Im taking the opposite side saying the credit quality is not the greatest if it was rated. But that is more on the corp structure set up and weaker credit rating of Charter. That being said I told myself if it got over 8% officially I would start to toe back in. So my first 200 share reentry is in the books.

  6. Anybody know anything about these agency bonds.? I just noticed this one yesterday. It can be called in 6 months, but still not bad 6.44%. I was told by the bond specialist at Schwab that if they don’t call it in 6 months that it will go to maturity (10 years). Its new so Moody’s hasn’t rated it, but they’ve rated all the other AAA, S&P rates it AA+.
    FFCB 6.44% 11/01/2032 Callable
    Recently Issued
    Continuously-Callable on 05/01/2023 @ 100.00000

    1. “if they don’t call it in 6 months that it will go to maturity (10 years)”
      Well, that’s ‘different’. Did they say why? Doesn’t sound possible.
      What’s the company name? Not many AAAs out there.

        1. Looked it over- maybe I missed it, but I don’t see any listed with symbols- as the FFCB. Most pretty low coupon – with cusip #s.

    2. Along the same lines I received alert from Fidelity yesterday of 2 issues of FHLB (Federal Home Loan Bank) 6.45% due 11/9/2032 and 6.90% due 10/28/37. When I investigated at the time, only the 6.45% was showing… Now neither one is… That probably means they’ve sold out, but I’m not sure…. These seem so out of line high in coupon, I don’t know why. If it’s because of callability, I’m OK with that..

      1. Just to add a little more to this.
        FFCB just issued about half a dozen bonds yesterday.
        most were floating rate, but 3 were fixed rate.
        2 were callable, 1 was not
        the non-callable has an interest rate of 4.375
        the 2 callables were up at 5.4 and almost 5.9%
        so that should give an idea as to what the call features do to the interest rate.
        terms for all 3 are here:

        there are 4 issuers where you can download some of the offering documents just by knowing the CUSIP. Farm Credit is one of them.
        (actually, even if you don’t, since the pattern of CUSIP’s is predictable, with the issue code just going in an alphanumeric sequence)

      2. Picked up 20k of the 6.90% issue due 10/28/37 this morning at $100.30 at ETrade. 6.26% yield to call in April. YTM is 6.87%. CUSIP is 3130ATSB4. Really can’t beat the yield for AA+ rated paper. Definitely my highest rated security in my portfolio….

        Thanks all for the heads up.

      1. Not sure about that. If you look at others they have many drop down call dates in under calls. I’m not saying you are wrong, just what the Schwab guy told me. I’ve used this guy many times. He’s a specialist not some guy from the bond desk, who generally know nothing.

        If you are right I still think 6.44 for 6, 7 8 …. months is pretty good.
        Thanks for you opinion. You and Grid always have good information.

          1. Grid… It’s tough for crusty old bond traders to learn from you when you keep accusing us of being ripoff spread artists…. Ha! Back at chya… 😉

            1. I didnt actually confirm, but 144a bonds are only supposed to be issued to “qualified” individuals which I am not. Of course this could be a clerical error from Finra, I suppose.

        1. JB – I agree with you that the price seems cheap enough that if it gets called quickly not much is lost although of course theoretically it will only be called at a time when our ability to reinvest will be lower than it is now….

          But regarding call, when you see others that “have many drop down call dates,” what that is showing are dates when the terms of the call are changed – in other words when call price might change from 101 to 100.50 to 100…. I can’t think of a continuously callable issue that I;ve ever seen that can possibly be called on only one date 6 months out and then never again… Maybe your Schwab guy was giving you his opinion on the direction of interest rates more than anything else, who knows, but I would not take what he told you as gospel… That being said, there is certainly something odd about these issues of Federal agency bonds that they should come to market at such relatively cheap levels….I don’t know if that should be a red flag or an opportunity…. I did go in for a small amount though

          1. I thought it was strange too. I bought a small amount. If it gets called, I’ve made worse mistakes.

            Thanks again to the two of you.

  7. ZIONO is trading near $25, 6.3%, fixed to floating, 3/15/23 with 3 mo-Libor+ 4.25%. x-div in about a month, qualified, split investment grade. Not bad a deal even it is called.

    1. MFZ – Agreed. Have been trying to buy for a while. Got in today at $25. My guess is they will call.

    2. If you collect two payments before call, @ purch of $25, you make 3.15%
      I think it’s easy to do a lot better with other stocks. And of course annualized – 6.3%. If it goes a lot lower- even better.
      But you get to start the hunt for what to buy for replacement.

      1. Gary- you are correct except in the annualized return. The next x-div is one month away; so you get 2 payments over approximately 4 month. That would translate to about 9.45% annulaized. Also, it is possible that this issue will not be called and rate gets reset.

        1. Yup- annualized can look really good. One month pmt would give you 12.6%.
          Just kidding- sort of. Reminds me of Calls- one month profit of 5%= 60% annualized – you just have to repeat it every month- good luck with that.
          And yes- best outcome would be to float at these nice high rates.

    3. The Zion Bancorporation declared dividends on ZIONO and ZIONP today. No mention of a call.

  8. FAT Brands (NASDAQ:FAT) has redeemed 1,821,831 shares of its 8.25% Series B Cumulative Preferred Stock from an affiliate of Garnett Station Partners for $43.2M.
    The shares were redeemed at a price of $23.69/share plus accrued and unpaid dividends to the date of redemption.
    FAT Brands CEO Andy Wiederhorn said, “The redemption of this Tranche of Series B Preferred Stock will yield significant cash flow savings for FAT Brands (FAT) as our securitization facility, which funded the transaction, has a lower cost of capital than the effective dividend rate on the redeemed preferred stock.”

    1. $23.69 is a fat premium to pay to redeem FATBP shares which are currently selling on the open market for around $18. 🤔

      1. Citadel:

        FAT really had no choice in the matter but to pay up to redeem the preferred. This company is a mess.

        There are two large holders of FATBP that exercised their rights to “put” their FATBP back to the company (at $135M in proceeds) and had not yet received their money back.

        That $135M amount has been moved to the Liability side of the balance sheet under “Redeemable Preferred Stock”. This is a large amount of money, as the equity market cap of the whole company is only $142M.

        FAT is now paying 5% interest (holder exercised right on 3/22/22) on $67.5M (on top of the 8.25% dividends) and 10% on the second $67.5M (holder exercised right on 10/7/21). This extra interest expense on this $135M cost FAT $4.7M during the quarter. Ouch.

        Check out Note 12 in their recently issued 10Q.

        GFG Preferred Stock Consideration
        On July 22, 2021, the Company completed the acquisition of GFG. A portion of the consideration paid included 3,089,245 newly issued shares of the Company’s
        Series B Preferred Stock (the “GFG Preferred Stock Consideration”). Additionally, on July 22, 2021, the Company entered into a Put/Call Agreement with the GFG
        sellers, pursuant to which the Company may purchase, or the GFG sellers may require the Company to purchase the GFG Preferred Stock Consideration for $67.5
        million plus any accrued but unpaid dividends on or before August 20, 2022 (extended from the original date of April 22, 2022), subject to the other provisions of the
        Put/Call Agreement. If the Company does not deliver the applicable cash proceeds to the GFG Sellers when due, the then amount due will accrue interest at the rate
        of 5.0% per annum until repayment is completed. On March 22, 2022, the Company received a put notice on GFG Preferred Stock Consideration and reclassified
        the GFG Preferred Stock Consideration to current liabilities on its condensed consolidated balance sheet.

  9. I have had my fill but I want to let everyone know they should look at SCE-PL
    Your getting a utility trust preferred that is cumulative , 15% tax rate and
    Ba1 / BB+ earning 7.1% Edison does do partial calls of their older preferred, but with this just issued in 2017 I expect it to be around for a while.

  10. prif-i down 7.3% now trading @ $20.33, while its sisters prif-g or prif-f only dropped less than 1%. Anybody can explain this?
    Some people are simply throwing the baby here? Is it a bargain to buy more here? (the terms and yields of these 3 are 2026 6.25% (-g) , 2027 6.625% (-f) and 2028 6.125% ( -i) ; does this explain why -i tanked?).

    Tim: do you see anything here?

      1. Having such low daily volumes, I guess that is why we can have this (temporary?) situation. Brave investors (braver than me…) may be able to benefit from this.

    1. I could be wrong – someone please feel free to correct me ……
      But my understanding is that the PRIF fund has a lot of exposure to the CLO market

      These are very low quality type of loans and with credit getting tight these loans may be toxic and risk may be elevated
      Other funds that deal in the same junk like Eagle point credit are taking a strong poke with a cattle prod
      I cant find the article but I think prif has the same management as psec – and they suck – I had the psec/a shares but management kept selling private preferred shares a 6.5% – so i sold at a small loss and will never look back- reminds me of my GE shares back in the day

      so basically i think this may be a risk story
      Sorry if this is not helpful

      1. PN, Weekend assignment:
        Study CLOs. There are good general searches on how they work. You’ll get it. The cash flow from the grouped loans are divided into tranches, like steps. EXACTLY WHICH tranches you own is the IMPORTANT distinction. Then, look at PRIFs portfolio. Usually, in general, the highest tranches are just not available to the ordinary folk.

  11. Finally the last two biggest investment grade 6%er coupons coming down.

    Trading new lows. If you scroll down a little bit, that big grocery list of uber high quality preferreds I posted all trading new lows right now. I believe this has been the trend as we start moving closer to the next Fed hike.

      1. sc – Sure thing.


    1. Here’s one of the big changes that’s going to severely impact millions of people – thank goodness they’ve thought to change this!

      Tax on Arrow Shafts. For calendar year 2023, the tax imposed under
      § 4161(b)(2)(A) on the first sale by the manufacturer, producer, or importer of any shaft of a type used in the manufacture of certain arrows is $0.59 per shaft.

      1. For anyone who may be wondering, the comment about the Arrow shaft tax was supposed to be in clarification of Mike Russell’s post in “Safety and Yield – What More Could One Want? Corrected” regarding IRS’s overnight announcement. It wasn’t an arrow shot out of the blue…

        1. For anyone questioning whether the IRS is trying to “shaft” taxpayers……now we know.

  12. GOODO going from bad to worse, down $1.55 to $18.55? GOOD common stock up over 1% – a real head scratcher.

    1. Well I did my 15 minutes of due diligence at caught some at 18.22 and 18.31. No bids filled lower. High risk bucket material. Just a wee bit. Thanks for the heads up. The common can slash that div and it looks like they are handling their 2022 debt maturities with no major stink. Should pay regular.

    2. There was a big end of day seller with GOODO who just wanted out I don’t believe it is any more than that. I was able to buy 400 shares between 18.20 and 18.51 and then in turn sold 300 shares of GOODN at 23 or so to pay for it.

      So essentially increased my yield for similar issues by about 1% (GOODN currently yielding 7.2% while my GOODO additions are around 8.15%

      1. Mav:

        Agree on GOODO… I also bought some at $18+. Crazy things happen to individual preferreds in this environment.

        GOOD’s dividend coverage on the preferreds is stellar.

        They did $33M in free cash flow (after cap-ex) during 1st 6 months of 2022. From this amount they paid $6M in preferred dividends.

        Recent press release from GOOD (10/5/22):

        Gladstone Commercial Provides a Business Update

        MCLEAN, VA / ACCESSWIRE / October 5, 2022 / Gladstone Commercial Corporation (Nasdaq:GOOD) (“we” or “Gladstone Commercial”) is a real estate investment trust (“REIT”) focused on acquiring, owning and operating net leased industrial and office properties across the United States. We are providing the following business update regarding our portfolio performance during a time of market volatility.

        100% of September cash base rents have been paid and collected.
        Portfolio occupancy is at 96.9%, as of September 30, 2022.
        We acquired two industrial assets, totaling 116,703 square feet, in Jacksonville, Florida and Fort Payne, Alabama, for a total purchase price of $13.6 million.

        Year-to-date, we have acquired 1,105,006 square feet of industrial real estate, comprised of eleven properties and six tenants, with a weighted average remaining lease term at acquisition of 13.8 years for a total cost of $97.5 million.

        Year-to-date, we extended or executed 501,501 square feet covering nine tenants, with an average remaining lease term of 8.1 years. The annualized straight-line rent of these transactions totals $5.8 million.

        Since January 1, 2022, and through September 30, 2022, we have issued 1,992,706 shares of common stock for net proceeds of $40.6 million.

        We continue to have ample liquidity and a strong capital structure. As of September 30, 2022, our current available liquidity is approximately $64.0 million via our revolving credit facility and cash on hand.

        We have never cut or suspended our dividend since our IPO in 2003.

    3. Early end of year tax loss harvesting would be my guess
      I will add a little to my position next month after the next fed rate hike.
      Higher risk but to juice income on a monthly basis makes buying a little easier to do.
      I added to my ADC/A position last week.
      Split IG 6.5% monthly makes me do a mini happy dance.
      I’m adding to it on the way down along with CMS/C – These may be outstanding for a long time – fingers crossed.

  13. Cedar B&C dividend declared
    payable on November 21, 2022 to shareholders of record as of the close of business on November 10, 2022

    1. all the utilities are getting killed today
      doing a little nibble on d and aeppz which is a convertable

      1. On the convertibles, make sure you read the terms first.
        AEPPZ is a mandatory convertible, so the face amount is not what you will be paid, you will receive shares of stock at a fixed ratio.
        If the stock tanks, this will go down with it.

  14. ok probably should have put this in alerts in the first place. PRIF-K being sold off today down almost $2. Heavy volume but only for this issue. The others in the PRIF family are untouched.

  15. New Issues – Federal Home Loan Banks – I received a notification from Fidelity of new Agency issue of FHLB. Expected yields seem so out of line cheap –

    FHLB 5.50% due 10/27/27 @ 100
    FHLB 5.58% due 10/12/29 @ 100
    FHCB (Federal Farm Cr) 5.90% due 10/12/32 @ 100
    FHLB 6.09% due 10/19/37 @ 100

    All 1k issues. all Aaa/AA+, all callable. What am I missing?

      1. RB – Can you discern from the available info if these are callable only on specific dates? For example looking at the 5.50% issue, Fidelity shows first call to be 1/27/23 but then they show a series of additional call dates @ 100 every 3 months thereafter… is that implying only callable on the specific dates? The Farm Cr issue seems to read differently and is more likely continuously callable after 1/12/23. The 5.50% issue seems to be the only one that has that provision where maybe only callable every 3 months.

    1. 2wr–just a quick look see they seem a about .5 to .7% high assuming they are pari passu.

      1. That’s kind of what I was thinking too, Tim….. Not that I completely trust the info I get from Fidelity fixed income, but they did confirm what I thought about the call feature on the 5.50% issue CUSIP # 3130ATMD6 – it is the only one of the 4 that is not continuously callable after the first call date…. It is callable only on specified call dates 3 months apart after the first date of 1/27/23. IMHO, that’s a little positive wrinkle on that specific maturity.
        Also Fido says this is in an order period until 10/27, so an order placed today is theoretically cancellable up until then.

      2. Tim, could you please explain about ‘5 and .7 high’ comment? They don’t trade yet. You can still put orders now – I did and it executed at $1,000 (or so I think) – even though the interest will not start accruing for a few days.

        1. Victor – Although these particular FHLB bonds are not yet trading you can look to see where other FHLB bonds that are outstanding are trading….My focus is on the 5.50% issue due 10/27/27 so I can narrow my search down to FHLB bonds in that maturity range….. From what I see a callable FHLB 4.05% due 8/15/27 and currently callable is the cheapest one in the range and it is quoted 4.96% bid/4.81% offered…. So knowing that, I’m hoping that Tim means that the YIELD on the new issue is high (i.e. the bond is too cheap) by about 50 to 70 basis points NOT the price being too high by .50 to .70. Right, Tim? Which one did you buy, Victor?

            1. Interesting that you could buy 1k as the Fidelity description confirms what James posted earlier that the minimum purchase is supposed to be 10k. I put in an order for 10k and was confirmed as well which is surprising since my Fido rep said yes I could cancel an order up until 10/27…

  16. Gnt-a now @ 22.75 yielding >5.7%, rated as A2. Nibbled a little.

    Any insight on how good this is, and what its coverage is now?
    Is it cheap because they r close to break the 200% coverage?

    Tim/grid u like this @ this level?

    1. According to CEF Connect, coverage is about 4X now, so no problem there. I have some shares, but 5.7% isn’t a screaming bargain these days, even given the safety.

  17. CHSCL is continuing to drop, current bid/ask is 24.96/24.99. Thought I got a deal at 25.07 until it kept going down. Que Lastima.

    1. I was looking at PFF’s holding spreadsheet and it seems they own every single preferred CHS has issued. I have no idea if they are the one unloading but I snagged more at 24.92 today. I have a couple of orders below that to catch a dump. Definitely quite the amount being sold off.

      The strategy is that L has a decent yield I can live with. It diversifies my holdings. If common sense has any hold at CHS this would be the last fixed preferred to be called and I like to think of it as the new “8%er” (CHSCH). I would like to own a bit more so it pays me 1000 per year. A dump today would accomplish the goal. Part of me feels like I am being greedy and should not even worry about paying an extra dime or two. Just snag it at par or slightly above. Not often this low price comes along.

        1. I get these confused as well with 5 different preferred.
          3 are fixed. 2 are fixed/float.

          Fixed below:
          CHSCL is actually the one that pays 7.5% and the call date is 1/2025. Buyable at 25 today.
          CHSCP is the danger zone one that pays 8% and can be called 7/2023. People are paying 27.75ish today. I made a typo above confusing it with CHSCH for some reason.
          CHSCO pays 7.875%, callable 9/2023 and it trades for approx 26 today.

          So L seems like a no brainer. O has a bit more risk trying to predict when they would call it. P is playing with fire.

          As for the fixed/float I have no interest in them as the fixed part is quite low. 4.1% or so plus 3 month libor which may or may not be as high today when the float comes around in 2024.

          1. I bought 2000 CHSCL today at $24.985. The 7.5% yield is something that I (hopefully) can keep for a long time. However, if rates go down over the next couple of years, I suspect all of them might be called.

  18. CHSCL trading at multi-year lows. Last trade 25.30. Callable 1/21/25. 7.5% coupon and 7.4% yield. Great, rock-solid agricultural cooperative with tentacles in energy businesses.

    1. Yea.. I have been buying some. Been falling all day as I was watching and now in the buy zone. Even if called it is a nice total return in a few years.

  19. Many of these trading at or putting in brand new 52 week lows with yields >6% and/or falling back below par:

  20. Tenneco Announces New Conditional Redemption for 5⅜% Senior Notes due 2024 and 5.0% Senior notes due 2026
    October 06, 2022

    SKOKIE, Ill., Oct. 6, 2022 /PRNewswire/ — Tenneco Inc. (NYSE: TEN) (“Tenneco”) today announced that it has rescinded the notice of conditional redemption it previously issued on September 7, 2022 and has issued a new notice of its intention to redeem all of its outstanding 5⅜% Senior Notes due 2024 (the “2024 Notes”) and all of its outstanding 5.0% Senior Notes due 2026 (the “2026 Notes” and, together with the 2024 Notes, the “Notes”) on November 7, 2022 (such date, as it may be extended as described below, the “Redemption Date”), subject to the satisfaction of certain conditions.

    1. Shouldn”t affect the prefs right?’
      Could be an interesting stress test on CEF prefs being ultra safe though.
      And a test I’m rather keen on it passing being a longtime holder of some 700 shares of NCZ-A. Been one of those core sock drawer don’t even think about until now. Have there been any other such CEFs that have suspended common div like this recently?
      Not doing anything other than sitting, watching and waiting. Price is 22.50. Very thinly traded..

      1. From the article: “Recent market dislocations have caused the values of the Fund’s portfolio securities to decline and, as a result, the Fund’s asset coverage ratio for total leverage as of September 30, as calculated in accordance with the Investment Company Act of 1940, was below the 200% minimum asset coverage guideline.”

        From the prospectus: “while 200% asset coverage of senior securities representing indebtedness is required for distributions on Preferred Shares.”

        So those 200% are not the same thing. Meaning how it is calculated. The first involves debt AND preferred while the second is just debt. The 200% mentioned in the article is this one:

        “Under the 1940 Act, the Fund is not permitted to issue new preferred shares unless immediately after such issuance the value of the Fund’s total net assets (as defined below) is at least 200% of the liquidation value of the outstanding Preferred Shares and the newly issued preferred shares plus the aggregate amount of any senior securities of the Fund representing indebtedness (i.e., such liquidation value plus the aggregate amount of senior securities representing indebtedness may not exceed 50% of the Fund’s total net assets). In addition, the Fund is not permitted to declare any cash dividend or other distribution on its Common Shares unless, at the time of such declaration, the value of the Fund’s total net assets satisfies the above-referenced 200% coverage requirement.”

        So based on that I can see the preferred getting paid in a regular manner. They are cumulative so common won’t see a dime even if they stopped for any length of time. It would take a much larger melt down to cause the preferred to stop getting paid.

        At least this is how I understand it. It is not the easiest topic for a non finance person to understand fully and in detail. I am open to all corrections and comments on this.

        1. I agree with @fc, take for example the 03.2020 meltdown, same thing happened to NCZ, they posponed the common div for a while but NCZ-A itself kept paying its regular div without any issues, it will take something way more serius to stop the div of the Series A.

          1. Someone:

            Anyone involved in the securities of NCZ should know that it is a horrible CEF with way too much leverage. $271M of total preferreds with $109M being 5.5% NCZ+A. $162M are the dreaded floating-rate auction rate preferreds (ARPS).

            NCZ did only $7.4M in net investment income during the 6-month period ending on 7/31/22, and from this amount they paid their $4.1M in preferred payments. From this $3.3M in cash flow, they paid $17.1M in dividends to NCZ holders.

            They have done this over and over again, and now sport a total distributable earnings deficit of negative $253M. They are forced to constantly sell some of the fund’s holdings to meet the substantial 15% yield on the common shares.

            CEFs like NCZ are in a NAV destruction death spiral in today’s environment. Falling values for their portfolio holdings and rising costs on their floating rate leverage (it seems only a few fund families hedge these floating rate costs via swaps). A year ago NCZ was paying 16 basis points on their ARPS; now they are paying rates from 3.16 – 4.22% (as of 7/31/22 – these rates are likely much higher now).

            If the bear market continues, many highly leveraged CEFs like NCZ are likely going to need to cut their dividends substantially and/or raise equity to ensure their survival. Almost all have been reluctant to cut the dividends so far….NCZ has declared their normal $.035/monthly dividend through year-end. What…me worry?

            NCZ has 76.1M shares outstanding trading at $2.865 – or $218M in assets. (the good news is that the NAV is $3.48/share or $264M).

            If the fund were forced to liquidate today, they obviously could not redeem the $271M total in NCZ+A and the ARPS. These ARPS can be nasty; if the fund keeps falling in value the $162M in ARPS have to be mandatory redeemed at par value. If that dire situation were to occur there would not be much left over for NCZ+A.

            I would not consider NCZ+A any type of sock drawer investment.

            1. Right. Avoid at all costs any of these funds using leverage. Cost to carry dramatically increasing. Better off building your own portfolio; if you want to be conservative don’t have a single position be more than 1-2% of your aggregate. But right now with uber high quality 6% yields available, I would not even bother looking at CEFs nor the like.

              1. Rob and Theta,

                Off the top of you head what are the weakest CEFs that have preferred or BB outstanding? At first glance avoiding the ones that are not investment grade seems like a no brainer to eliminate some possibilities. Are there other ones that we should be aware of if you have a moment to share?


                ADS Analytics as always has some useful articles on these subjects.

            2. Rob,
              Thanks for the above. Yes, you have me mildly concerned. Have always assumed that 200% coverage rule was the ultimate buffer. There is language in the prospectus which talks about having to redeeem NCA-Z at par if the coverage falls below this level for any extended period ( which it appears it has, just). Are you suggesting this would not apply and the ARPS redemption take preference?

              1. Adrian:

                I am unware if the ARPS redemption takes preference over NCZ+A. You would likely have to dig into NCZ’s ARPS documents to determine that.

                But I do remember that some of these CEFs went down during the NASDAQ crash in 2000 due to ARPS required redemptions.

                If they are pari-passu, both of them are likely to get much less than par value in a forced liquidation, unless someone is crazy enough to lend NCZ the $271M required for redemption of them both. NCZ really can’t issue more shares with the fund trading 15%+ below NAV. It is just a vicious NAV destruction cycle.

                It is why to this day I have always avoided buying any preferreds issued by CEFs that also have ARPS outstanding, no matter how safe those preferreds might seem.

                It seems the environment that I always feared for leveraged CEFs and their associated ARPS has arrived. Many CEFs stopped using ARPS, but a few obviously could not give them up – perhaps thinking low rates would stay low forever.

                  1. Oh boy.
                    here is the tender.

                    “a price per share equal to 97.95%” and equal between the auction and preferred.

                    On September 30, 2022, the Fund’s asset coverage ratio for total leverage applicable to preferred shares fell below a 200% minimum level
                    required as of that date. As a result, and in accordance with its Bylaws, the Fund announced the postponement of payment and declaration of
                    monthly distributions on its common shares that would otherwise have occurred on October 3, 2022. If the Fund does not satisfy the 200%
                    minimum asset coverage level by a cure date of October 31, 2022, it will then be required to redeem (within thirty-five days following such cure
                    date) a portion of its then-outstanding ARPS at liquidation preference in an amount (if any), pro-rata with the Fund’s outstanding cumulative
                    preferred shares to be redeemed, sufficient to restore compliance with the 200% minimum asset coverage level.

  21. Reinsurance Group of America 7.125% Sub Notes will list on the NYSE on Friday 10/07/2022 under symbol RZC

  22. Big spreads and low volume, but PW-A fell out of bed hard a few days ago, is recovering somewhat, but still has a yield>9% at the bid/ask midpoint

    1. Fidelity sent out the call notice for BRG-C today.

      10-6-22 is the official date.

      This one was winner for me when they were hard to come by.

    1. No idea. I own BC-A and B. They were bought when each one yielding slightly more then the other. If I wanted to add I would definitely consider C. I see no reason it should be so much lower then the others. Would make a good swap perhaps if the difference continues.

  23. Grid,

    Well this bad deed does not go totally unpunished. Got a card alerting me to the $13 million settlement that Amtrust agreed to pay for not telling the truth about their intentions with the listing of the pfd. Wonder how much it would have cost them to keep the listing?

    1. Rvert, I suspect over the long haul they probably came out better here didnt they. Being private they would have to file all info just for the preferreds. And being private maybe they dont want their info public for whatever reason. Maybe bought a bunch back too on the cheap, who knows.

      1. I had buy orders on 3 of the AMTRUST preferrds when they suddenly went dark. All 3 buy orders hit, then the price dropped like a rock and I lost several thousand as they cratered. Unfortunately I did not own them in the class period. I have at least got a years dividends back but it’ll take another year or 2 before I get my my money back. You have to be careful with Good until cancelled orders. Sometimes they hit for the wrong reasons.

    1. Yes this is going in the right direction,
      Today, I am seeing 4.5% 5 year CD’s with call protection = yes. and 4.75% 5 year CD’s with call protection = No. Still holding out for 5% 🙂
      Capital One 4.5 with call protection.
      Discover Bank 4.5 with call protection.

    1. 730Cap, It was one of the few that has stayed within 1 div payment for the last 6-7 ish months.

  24. Maybe swimming upstream here, though thought it worth throwing out an observation regarding the lower-rated/high-yielders; relative to the potential for a near-term recession.

    In a law of large numbers exercise, there’s a very high correlation between a credit rating and a company’s ultimate staying power, probability of distress or outright failure. Notable is that while rating focus on predicting a company failure, there are many levels of pain or lost sleep an investor may experience in lower-rated issues prior to actual default.

    Expectations are increasing that a recession is on the horizon. Related is that defaults tend to be clustered into tight periods of time that surround poor economic conditions. Complacency with lower ratings during periods of prosperity – including those fueled for many years by a lax fed – may yield to surprise downside outcomes when the economic environment is more challenging.

    The severity and speed of recent rate increases will disable marginal companies loaded with debt, irregular cash-flows or with low defensive capacity whose existence was made possible by lower for longer. Tighter underwriting, higher spreads and lower capital liquidity (think QT) will add to the challenge for the slightly stronger companies. Lower earnings and the resulting inability to service or cheaply refinance heavy debt overhangs will impair yet another group.

    This seems a good time to recall the adage “don’t fight the fed”, which has telegraphed quite clearly its intention to make life a lot more difficult. Marginal companies are going to fall – and it appears yield-chasing will be entering its cyclical punishment phase.

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