Ready Capital $25 Baby Bond “Queued Up”.

We see the new baby bond from REIT Ready Capital is set up in the eTrade database this morning. We do not see it yet at Fido. Likely it will trade within a day or so (or maybe even today).

This 6.20% issue will trade under ticker RCB.

Details on the issue are here.

1 correction from Justin is that the CUSIP on this issue has been changed to 75574U408.

57 thoughts on “Ready Capital $25 Baby Bond “Queued Up”.”

  1. Anybody have a GTC sell order for RCB that was triggered this morning with the huge jump in price. Mine hit a $26.57 for a nice flip profit of just under 5%.

  2. RCB now trading on Schwab but current ask is $25.49. Too rich for me with the 6.2% coupon….good luck to all with your choices

    1. I agree … too rich for me. It’s trading basically at the same level as RCP which has a higher coupon and a shorter maturity.

      1. Max – It’s only opinion, but what you point out as to why RCB is too cheap actually only points out how risky it is to buy RCP. RCP is currently callable and given its 6.50 coupon vs new issue at 6.20, it could be economical feasible for RCP to be called with the RCB issue though RC doesn’t seem to be planning to do so right now… Having said that, at 25.57 last price on RCP, the isssue has to remain outstanding for at least 4 months for a buyer to break even. That doesn’t feel like a good bet to me even though the YTM in ’21 shows as about 5.10%.

        1. 2whiteroses – Thanks for the comment. I was actually trying to point out that I felt that RCB was too richly priced versus RCP such that RCP was actually a better play as of this morning, IMO. Yes, RCP is indeed currently callable but at 101 with accrued interest until 4/30/20, so it didn’t make much sense to me for the company to call it when they only save .3% (6.2% versus 6.5%) less the premium they would have to pay to do so. And with less than two years to maturity, it’s risk of default would be less than a longer maturity bond. Ready Capital could get into a lot of trouble before 2026 and credit risk is a factor I give a lot of importance.

          You may disagree, and I respect that, but I don’t see a call coming until at least 4/30/20 when the premium goes away… and then a call would depend on market rates (and the administrative cost of a redemption) with less than a year to maturity to run.

          Just my opinion.

          1. Good point Max on the 101% call until next April–that little bit (25 cents) makes a difference.

          2. Max – Ooops! I misread the actual effective date of the par call vs 25.25 call…. I thought 25.25 ended in 2019 not 2020, so that does temper what I was saying… Thanks for pointing that out. In general, I’ve been going the other way on callability risk and been attracted to highly likely call situations when they provide an attractive yield to call vs present interest rates of the same maturity… It’s sort of a hiding out philosophy similar to the picking up pennies strategy only with better yields… I’ve been focused on CUBI preferreds recently, and bot CUBI-E today at 5% yield to 6/15/2021 call. My belief is they will get called no matter what the interest rate environment might be at the time, provided Customer’s Bank credit quality remains unchanged. CUBI itself is taking a hit today on it’s quarterly report, but I expected that to be possible. There are at least 3 references to their desire to call the preferreds when they become callable (CUBI-C is the first on 6/15/20) within the press release and conference call.

            1. 2whiteroses – thanks for explaining your approach and I want to ponder it when I have a quiet moment. It may be something I want to incorporate in my own investing. I’m always on the prowl for an edge. I have owned CUBI preferreds in the past.

            2. 2W, curious how it’s a 5% etc on the CUBI-E. Lowest price i saw it at was $25.83, which gave me a little under 4.8% ytc ? we u just rounding up? i know some good calculators have been shared here, wondering if my math is off.

              1. Franklin – Since I already made one miscalculation on here today, I had to recheck my numbers on CUBI-E just to make sure… Yes, I bot today at 25.83 BUT in order to do an accurate calculation of yield to call on a preferred or baby bond, both of which trade flat, you have to back out the “accrued,” even though technically speaking a preferred doesn’t have “accrued” since it’s not payable until declared. With CUBI-E purchased today, a buy at 25.83 includes 19.7 cents. If you round that to 20 cents and do the calc at 25.63, the yield to call is 5.03%. Whew. I think I did it right this time! Make sense?

                1. 2W, i wish i had a graphic showing a light bulb lighting up over my head! ya, makes perfect sense. Thanks for the explanation.

  3. As usual, Merrill not up to the task of trading this yet. Still can’t get the ticker/cusip setup so it can be traded. Still barking at them now.

    1. I just got them to pull their heads. You can trade it but you have to call in to place the order.

        1. I won’t chase after 25.25
          RCB is the first issue in a week or two and the very hungry are attacking it like it was their last meal.
          It’s at 25.49
          Am i wrong?

    1. Gary–one reader said it was scheduled to trade tomorrow (Thursday). It is in the database at eTrade, but not showing any trades.

      1. I entered an order on etrade this morning. it accepted it, but 10 minutes later I received a reject email. Is there a way to get a post from e-trade or schwab(my two accounts) once something starts trading?

    2. Vanguard’s Fixed Income trader just told me (RCB) is scheduled to trade NYSE tomorrow the 25th. He said there was not a single dealer that has the bond listed on the bid or offer right now. Also, that there was a trade for 1000 shares from the day of offer last week, but no other trades since.
      Hope that helps, Nomad

    3. I called Schwab this morning to inquire about RCB and 30 minutes later (just now) I received a call offering me shares at $25.21. I declined.

      It will be interesting to see what tomorrow brings.

      I am curious – would any of you have bought at $25.21?

      1. I’m personally hoping to get in right at $25. Also would take less but not holding my breath. Not sure if there is enough meat on the bone at $25.21. This will probably trade up but I’m not going to reach here.

        1. Thanks, Ken. I appreciate your input. I may spring for a few shares at that high price but not as many as I would have if the price had been more in line with my parsimonious nature.

      2. Amy–I may buy a few shares, but am waiting for exchange trading. Whether that is “pennywise and pound foolish” will be known soon I guess.

        1. Thanks for weighing in, Tim.

          So you guys may end up laughing at me but I went ahead and bought some shares at $25.19. Now I can sit back and see if that was a smart or stupid move.

          I can always buy a bit more if it shows a better price tomorrow, which I am betting it will.

          1. Of course we all know that over the course of years a nickel or dime doesn’t matter–but I am by nature cheap so want to save my nickels if possible.

            1. I am the Queen of Cheap and have nickel and dime-d myself out of some good issues by bidding too low and watching them run off. Not that I think this issue is going to “run off,” by any means…..but it will be interesting to see what it does in this currently crazy fixed income world.

              Regardless, I didn’t put too many chips into it.

              1. Hi Amy,
                I also called Schwab – just now (3pm ET) – and asked for 1,000 and they came back with $25.19 but also wanted $25 for making the trade + the normal $4.95….so you’re not the only one counting nickels (LOL), like Tim I’m waiting for exchange trading – tomorrow hopefully. We will see !!!

                1. Gary, Schwab will usually back out the $25 phone order charge if asked sweetly to do so. They have done it for me, but I’ve been with them for 25 years. Won’t hurt to ask next time.

                  1. I did ask for the normal trading fee but since it was not listed normally yet the trader said he was not allowed to reduce the fee. Special order. Looks like I should have gone ahead anyway. Ha Ha

                    1. Gary, not unexpectedly the women traders on the Bond Desk seem to be more helpful in that respect.

              2. Amy, I was hot to own SREA so called it in day before and paid $25.05 plus $20+$4.95 for a big pile. Opened and traded flat and one point actually dipped cents under. I was just happy to own it and didn’t care a whit about that nickel plus $20+$4.95. In the big picture it doesn’t matter where it trades tomorrow, just longer term. If you are happy to own it today then you should be happy to own it tomorrow.

          2. Well Amy, it’s above that now. I’m not chasing, have an order in at $25 if it somehow comes down.

    4. Bought small amount yesterday at Schwab by calling in to Bond Desk and asking for a quote from “group 98” (whatever that means??). Had to pay $25.30 for what is intended to be a flip, not hold. Don’t know if it will work on this one, we’ll see.

  4. News Story for Sachem Capital Corp

    Sachem Capital Announces Proposed Public Offering of Common Stock

    Business Wire | July 23, 2019 04:04:00 PM ET

    BRANFORD, Conn.–(BUSINESS WIRE)– Sachem Capital Corp. (NYSE American: SACH) today announced that it has commenced an underwritten public offering of its common shares. All of the shares are being offered by Sachem Capital Corp. The offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.

    Sachem intends to use the net proceeds of this offering for working capital and other general corporate purposes.

    Aegis Capital Corp. is acting as the sole book-runner for the proposed offering.

    1. Affinity, this is a bit of a kick in the “SACH” for those that follow King Brad Thomas (couldn’t happen to a nicer self-serving guy) on SA considering he just recommended this common REIT. I own the baby bond SCCB and this is good news, as I welcome large secondary capital common offerings after I am fully invested in the bonds or preferreds.
      i protegere eos qui se protegere non,
      Nomad

      1. Hi Nomad,
        I also own SCCB and found this announcement a lil shocking since they just issued SCCB so recently. Something’s going on… My SACH hurts on this news as the ETD may get hit. At least SCCB is on a short leash, being term dated so to speak.

        As for BT, I ‘quit’ following him years ago. Couldn’t take his ego anymore!

        1. I believe Sachem raised $23,663,000 from the issuance of baby bond SCCB https://www.sachemcapitalcorp.com/news-media/press-releases
          Sachem (SACH) closed today with a common REIT market cap of about $505+ million; of course, this is before their latest common secondary. I like the 7.125% baby bond, but of course would let it go at the right price. The problem is that I currently have way too much money market cash. I’m definitely having a hard time finding any decent value so I mainly just sit and watch. I have been laddering short term (7 years or less) tax free insured bonds, but my portfolios calls are hard to keep up with.
          Time flies over us but leaves it’s shadow behind, Nomad

      2. Pretty sure Rida and his minions just recommended SACH as well.

        I already flipped out of SCCB, ran up too fast in my opinion. If for some reason price weakness spills over to the bond, I will probably buy back in.

    1. Alan–their financials lately–as a REIT–look pretty good, but they did have a big “gain on bargain purchase” this last quarter (I am always leery of these types of gains). I think as long as the economy remains favorable they are pretty average. I am looking to buy a smaller position.

  5. Ready Capital Corporation Announces Closing of Public Sale of Senior Notes and Full Exercise of Over-allotment Option

    PR Newswire PR NewswireJuly 22, 2019
    NEW YORK, July 22, 2019 /PRNewswire/ — Ready Capital Corporation (NYSE: RC) (“Ready Capital” or the “Company”) today announced that it closed an underwritten public offering of $57.5 million aggregate principal amount of 6.20% Senior Notes due 2026 (the “Notes”), including $7.5 million aggregate principal amount relating to the full exercise of the underwriters’ over-allotment option. The Notes were issued in minimum denominations and integral multiples of $25.00. The Company intends to use the net proceeds from this offering to originate or acquire additional mortgage loans and mortgage-related assets consistent with its investment strategy and for general business purposes. Sandler O’Neill + Partners, L.P. and B. Riley FBR, Inc. served as book-running managers for the offering.

    The Notes have been approved for listing on the New York Stock Exchange under the symbol “RCB,” and trading is expected to commence within 30 days of the closing of the offering.

    A registration statement relating to the Notes was declared effective by the Securities and Exchange Commission (the “SEC”) on July 27, 2017. The offering was made only by means of a preliminary prospectus supplement and accompanying prospectus, which have been filed with the SEC. A copy of the prospectus supplement and accompanying prospectus may be obtained free of charge at the SEC’s website at http://www.sec.gov or from the underwriters by contacting: Sandler O’Neill + Partners, L.P., 1251 Avenue of the Americas, 6th Floor, New York, New York 10020, Attention: Syndicate Operations (telephone: 1 (866) 805-4128, email: syndicate@sandleroneill.com) or B. Riley FBR, Inc., 1300 North 17th Street, Suite 1300, Arlington, Virginia 22209 (telephone: 1 (703) 312-9580, email: prospectuses@brileyfbr.com).

    This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the Company’s securities, nor shall there be any sale of the Company’s securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

    About Ready Capital Corporation

    Ready Capital Corporation (RC) is a multi-strategy real estate finance company that originates, acquires, finances and services small- to medium-sized balance commercial loans. Ready Capital specializes in loans backed by commercial real estate, including agency multifamily, investor and bridge as well as U.S. Small Business Administration loans under its Section 7(a) program. Headquartered in New York, New York, Ready Capital employs over 400 lending professionals nationwide. The Company is externally managed and advised by Waterfall Asset Management, LLC.

      1. Yes–trading is interesting—almost all small buyers–100-500 shares. Nothing big that I can see.

        1. Tim, put in order for 985 at 25.39. filled for 940. why would they be not able
          to get the other 45. thank.

          1. Ed–well that is a bit silly and you would think it would fill, but these things do happen fairly regularly. If your order was “all or none” you will have to live with the 940–but if you didn’t indicate that it may yet fill today with no additional commission. More than once I have put in a limit sell on 100 shares only to have it take 3-4 trades to complete the sale–but it is only 1 commission as long as it takes place on the same day

              1. I also do not pay any phone fees or commisions at Schwab….which was especially helpful with I got only TWO shares of NYCB-U when my order was for 800.

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