Sandbox Page

I will be adding a new link titled “Sandbox” in the right hand menu.

That link will get you to this page.

I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.

I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.

I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.

2,837 thoughts on “Sandbox Page”

  1. Fidelity money market rates this morning:

    Taxable: SPRXX @2.83%
    Tax Exempt: FTEXX @2.10%

  2. #inversecramer on Twitter is entertaining.
    I haven’t stopped laughing at the spoof.
    They launched an Inverse Cramer ETF?
    I love this stuff.

  3. Fed board member Christopher J. Waller gave a speech on Thursday 10/6. Interesting comment . .

    *****************************************************************************

    In considering what might happen to alter my expectations about the path of policy, I’ve read some speculation recently that financial stability concerns could possibly lead the FOMC to slow rate increases or halt them earlier than expected. Let me be clear that this is not something I’m considering or believe to be a very likely development.

    I am a little confused about this speculation. While there has been some increased volatility and liquidity strains in financial markets lately, overall, I believe markets are operating effectively. Actions by banks and financial regulators in recent years have greatly strengthened the financial system. Banks are well capitalized. Functioning in the Treasury, equity, and commodity markets remains orderly.

    https://www.federalreserve.gov/newsevents/speech/waller20221006a.htm

  4. Lacy Hunt is a well-known economist/fund manager that has been around the block a few times. For many years before 2021, he was one of the few voices forecasting lower for longer US Treasury long term rates. Other prognosticators like Gundlach, Gross, Wall Street, had many false alarms that the ~ 40 year old bond bull was over and UST long term rate increases were imminent.

    Lacy did an interesting and informative deep dive interview with Danielle DiMartino Booth last week. She used to be the right hand person to Dallas Fed President, Richard Fisher. She is well connected and has a much better understanding of how the Fed works behind the scenes.
    Well worth watching or listening to the interview IMO. A little pertinent to all fixed income investments like we discuss around here.
    Three takeaways from the interview:

    1) Lacy details all of the times the Fed did achieve a soft landing when increasing rates without causing a recession. Happens about 10% of the time, the last 80 years or so. Not so likely this time.

    2) Lacy has a GREAT explanation for why we have high inflation and WHEN it will subside. He forecasts it will START to go down around the end of Q1_23 to Q2_23. He says it will be a very gradual decline. Key is tracking ODL aka Other Deposit Liabilities.

    3) The Fed is operationally LOSING money every day and will continue to do so for quite a while. When ZIRP was in effect, the Fed turned a profit every year and remitted it to the US Treasury. It helped reduce the annual deficit. Today, the Fed’s cost of funds is greater than the interest they are earning on their portfolio. So they will HAVE to get Congress to fund the deficit. Lacy is adamant that Congress will do so, but they MIGHT impose conditions, like ending QT and restarting QE. I have NEVER heard this before.

    We are NOT even going to talk about the NAV of the Fed which is underwater if you marked all of their securities to market. They are just like us in that regard, except they don’t care. The Australian version of the Fed, “Reserve Bank of Australia,” marked their portfolio to market which caused a negative NAV.

    Link to Lacy Hunt-Danielle DiMartino Booth interview:

    https://www.youtube.com/watch?v=J5jn6qgbgQw

  5. New Cramer ETFs ~ I hear we will soon have “inverse” & “long” Cramer recommendations ETFs by Tuttle Capital Management…. SJIM vs LJIM…will be interesting to see how they track out.

  6. Just a heads up for those interested..
    Just bought 1,000 shares of LBRDP (LIberty Broadbrand 7% Preferred) recently discussed at $24.05
    Based on Tim’s overview and my own due dilligence it looks solid to me. $50B+ market cap with Ba2 STABLE rating.
    Good luck with your choices
    Gary H

  7. The Bluerock spinoff and merger with a Blackstone affiliate seems to have gone through. https://ir.bluerockresidential.com/sec-filings-reports/sec-filings/sec-filings-details/default.aspx?FilingId=16123927
    BRG-C and BRG-D should be redeemed with six days interest. The spin-off company, BHM, opened at 19.94, peaked at 26.24, and has settled down around 23. Holders of the BRG common should have gotten, or should shortly get, $24.25 cash per share plus one share of BHM for every eight shares of BRG.

  8. Etrade is now paying 2.75% up from 2% in premium savings. Looks like as fed raises they raise too. I hold cash there and immediately transfer to my Etrade trading account if needed and once something sells I immediately transfer it into the savings account. FDIC insured

  9. Tim-
    In the ‘floater’ list, RITM-D has a 2025 date placed where its 11-15-26 date should be.
    Also- I don’t see ABR-F 10-12-2026 in the list

    Thx

  10. Hello again,
    Thank you for your responses to my wash sale rule question. I did reach out to Vanguard. After three different people they referred the question to someone in their “tax / IT department” (basically, how is the software that generates 1099 going to report). The example I gave was exchanging JPM-K for JPM-L. Wash sale or not?
    They just called back. They said it will NOT be reported as a wash sale by Vanguard, because Vanguard is only responsible for reporting identical ticker or cusip trades. They went on to say its a grey area not clarified in IRS wash sale rule portion of… IRA550 i believe. They did say if they were bonds of the same company with different maturity or coupon and NOT preferreds, there would be no question. (not a wash sale).
    Thank gain everyone for all your help.
    Tim… Great site!

    1. I was pondering picking up some CUBB myself. 20% gain if/when rates turn around, plus, that divi.

    1. I assume this is due to the merger of Terra the REIT and the BDC Terra Income Fund 6? Maybe this is causing some ETF to have to dump it?

        1. Am I missing something? If they’ll be re-purchasing at par, seems like the price should be moving up on both TFSA and TPTA, not severely down? Or, as fc suggests, ETF(s) are dumping? Could be a quick windfall for the rest of us?? Any insight appreciated.

          1. Yes CR – I think you are missing something. They did not say they are repurchasing them at par. Nor did they say they are repurchasing all of them. Read what they had in the release carefully. They only say CERTAIN of the notes and then look at the last sentence below

            “The Company today announced that it intends to repurchase certain of its 6.00% Notes due 2026 listed on the New York Stock Exchange (“NYSE”) under the trading symbol TPTA, and intends to cause Terra Income Fund 6, LLC, a wholly owned subsidiary of the Company, to repurchase certain of its 7.00% Notes due 2026 listed on the NYSE under the trading symbol TFSA (“TFSA Notes”). As previously disclosed, Terra Income Fund 6, LLC is the successor obligor to the TFSA Notes originally issued by TIF6. The timing and amount of any repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, note prices, legal requirements and other factors, and may be made from time to time on the open market, in privately negotiated transactions or otherwise

            I don’t know enough about this company – but this does not give me a warm and fuzzy feeling. Is there common stock that is publicly traded? If not, I know I have been skeptical in another case of concerns of acquired securities going to the expert market – but in this case if they reacquire some on the open market and have no other public filing requirements, it makes you wonder (especially since both issues are small). I could be totally wrong there because again I don’t follow this company at all

            1. Thanks, obviously I was. Makes me wonder why more companies don’t re-purchase more of their debt or preferreds on the market when they’re way under par, rather than wait until call date. Are there prohibitions to that?

  11. Thoughts on the following IG corporate bond?

    Citigroup ~ new issue
    6% coupon maturing on 10/20/27 listed at par
    cusip 17330RH65

    1. I like it. Stepped up coupon too. Protects if interest rate rises. However, if they fall significantly in 2-3 yrs would probably be called.
      Bought a starter slug at Vanguard

      1. If you like this new Citi issue (cusip 17330RH65), check out fix2float C-J and C-K. They both currently trade a bit above par but yield over 6.5% and will float at more than 6% if rates similar in a few years when callable.

    2. Adrian, I’m curious did they charge you commission at VGuard or did you buy the Medium Term Note as a IPO/New issue?

      1. Newbie and Azure
        I got a little mixed up between 2 new issue orders bought today at Vanguard
        17330RWJ0 is the Citigroup 5.2% maturing 04/24 and paying quarterly
        89114X4B6 is the TD Bank 6.0% maturing 10/28 paying quarterly with a stepped coupon.
        And no…no commissions at Vanguard for new corporate issues.

        1. Adrian, I bought a nice slug of the CITIGROUP GLBL MKTS HLDG UNSECD MEDIUM TERM NOTE 6% due 10/20/27 (YES PLEASE) settles 10/20/22 CUSIP 17330RH65 @100 with ZERO commission at Vanguard a moment ago. 5 year maturity Citigroup Notes at the beginning of this year would have been about 2.5%. Should be rated A+/A2.
          Timing is everything in life, Azure ⭐️

    3. I saw that Citibank Global bond issue today, after reading the prospectus decided to pass on it, unless I read it wrong, it says only secondary market will be Citbank ? But I may buy a small amount and hold until maturity.

      “The notes will not be listed on any securities exchange and you may not be able to sell them prior to maturity. The notes
      will not be listed on any securities exchange. Therefore, there may be little or no secondary market for the notes. CGMI currently
      intends to make a secondary market in relation to the notes and to provide an indicative bid price for the notes on a daily basis. Any
      indicative bid price for the notes provided by CGMI will be determined in CGMI’s sole discretion, taking into account prevailing
      market conditions and other relevant factors, and will not be a representation by CGMI that the notes can be sold at that price or at
      all. CGMI may suspend or terminate making a market and providing indicative bid prices without notice, at any time and for any
      reason. If CGMI suspends or terminates making a market, there may be no secondary market at all for the notes because it is likely
      that CGMI will be the only broker-dealer that is willing to buy your notes prior to maturity. Accordingly, an investor must be prepared
      to hold the notes until maturity.”

      1. So this is an untradeable security that you can buy from a brokerage? Kind of like a non-traded REIT or BDC you would buy from a RIA. It is rated A2/A which is higher than parent Citigroup which is rated Baa2/BBB. 6% coupon seems awfully high for something rated that high. Interesting that only other issuer I see that highly rated with that rate is Credit Suisse, which I have posted about having an increased default risk. Maybe they have to offer it at that yield to pull in the public. Not clear to me why they couldn’t sell out the whole issue to institutions. Has kind of a “you are the sucker at the table” feel to it unless Citi has changed to a charitable organization to benefit small investors.

        1. That is boilerplate.
          It is a bond that trades only through certain brokers like every muni in existence.
          I wouldn’t read too much into it.

          1. Also, on the above “Untradeable” bonds…Does it particularly matter if you are keeping them till maturity? That is certainly the plan for me in buying these short and med term new issues.

        2. Moody’s upgraded Citigroup Global Markets in Aug of this year. According to Moody’s: “The upgrade to A2 was driven by CGMHI’s status change to become a Material Legal Entity (MLE) and a beneficiary of the secured support agreement within Citigroup’s Resolution Plan, which in Moody’s view now credibly results in incremental protection and a lower severity of loss for CGMHI senior creditors relative to Citigroup’s senior creditors in the event of Citigroup’s failure. Accordingly, CGMHI’s ratings have been re-positioned to a notch above Citigroup’s A3 senior unsecured rating.” Seems rock solid to a buy and holder investor.

  12. Good morning, at Vanguard I bought a nice chunk of taxable short term corporate bond Ipalco Enterprises Inc 3.70% Coupon due 9/1/24 CUSIP 462613AM2 @$95.941 YTM/YTW 5.932% YTC 6.143% rated BAA3/BBB-
    Please due your OWN deep due diligence my friends, as my risk level, time frame and need for income is definitely different then yours.
    Be well and happy investing, Azure

    1. Thanks Azure – the Ipalco issue is better than what I’ve been seeing in terms of rating, duration and yield. Got a nice chunk also.
      Joel

  13. Hello,
    I was wondering if there was any info or experience with wash sale rules…specifically regarding preferred shares. Are all preferred issued by the SAME company “substantially identical” if the coupon and maturity are different? Exchanging psa-g for psa-h in example..
    Thank you
    Apologies if I’m posting in the wrong space.

    1. When I have done it in the past my broker did not consider them substantially identical and allowed the loss claim.

    2. Depends on the broker, but I don’t think any broker does a match on an issuer, just a match on the exact security. But the IRS could catch that in an audit.

      1. Re Justin’s reply that has been my experience.
        ALSO, in another account titling: IE: Taxable > an IRA or> a spouse’s account.
        Check with your tax preparer and broker.

      2. Thank you for the reply.
        Any experience with how Vanguard and Fidelity treat such trades.

    3. Got this online from Baird financial if you would be selling a preferred for example and then buying a common. I couldnt find anything definitive as of yet for swapping between preferreds, but I thought someone answered this earlier this year (since we can’t search this site…). I thought the answer was they are not similar because they have different cusips, different prospectus, different maturity dates, different coupons, …

      Similarly, bonds or preferred stock of a corporation are not ordinarily considered substantially identical to
      the common stock of the same corporation. However, where the bonds or preferred stock are convertible
      into common stock of the same corporation, the relative values, price changes, and other circumstances
      may make these bonds or preferred stock and the common stock substantially identical. For example,
      preferred stock is substantially identical to the common stock if the preferred stock:
      • Is convertible into common stock,
      • Has the same voting rights as the common stock,
      • Is subject to the same dividend restrictions,
      • Trades at prices that do not vary significantly from the conversion ratio, and
      • Is unrestricted as to convertibility

  14. UK property funds limit withdrawals as pension funds shift asset

    Verbatim from FT:

    Three UK asset managers have said they are unable to handle heavy demand from investors seeking to withdraw from property funds, in a sign of how the fall in government bond prices is forcing pension funds to reallocate holdings.

    Schroders said it will make some redemptions originally due on Monday as late as July next year, while Columbia Threadneedle said volatile market conditions had forced it to switch from daily to monthly payouts. At the same time, BlackRock also imposed new restrictions on withdrawals.

    Funds that own hard-to-sell assets have struggled this year when volatility across stocks and bond markets has pushed investors to demand cash back in a hurry.

    A liquidity crisis in the UK last week sparked by plunging gilts prices has worsened the situation for some asset managers. Defined-benefit pension schemes, which are major investors in UK institutional real estate funds, have been rapidly selling a broad range of assets to meet demands for collateral.

    https://www.ft.com/content/34f679be-714e-4201-a8b3-cc0e96acc1a1

    1. Wow Tex. UK Pensions reclassifying LT assets as liquid assets. Lehman-ish feel to this.

      So apparently they indexed their outflows to bonds that were priced for lower for longer. We know there were contributing factors (Truss tax shock), but this appears in large part to be a textbook case/consequence of financial modeling built upon a foundation of unsustainable ultra-low rates.

      Sadly, there will be more.

    2. Tex, Thinking on this…there could be 2nd tier consequences.

      Blackrock et al will need to liquidate great numbers of SFRs onto the UK market to meet the redemption requests. They are huge players in the real estate sector so this will put downward price pressure on the already weak UK real estate market. This further reduce the NAV of the holdings.

      It’s a self-reinforcing spiral. As those LT assets lose value and if marked-to-market, the pension funds balance sheets will further deteriorate and be more deeply underfunded. That now needs a remedy, and so it goes.

      A form of contagion.

    3. Tex, pretty much what I said a couple days ago that the same thing happened but on a smaller scale When Brexit was voted on and passed.
      Applying the brakes on withdrawals as much as 1 month to 10 months out hoping panic will have subsided by then sounds like a hope and a prayer.
      Something like this can have the reverse impact.
      Wonder if the crisis will spread to the world markets like Covid did

    1. Good article, but just explains the obvious. The need to service the Federal debt is exactly why the Fed will soon back off from raising interest rates. The Fed will declare that a 4% inflation rate is acceptable because it has no other choice. I suspect, if you pinned its members to the wall, that almost all of them would like to see a serious recession to bring inflation back to a manageable level. The last thing the US needs is a push from other countries to move away from using the dollar in settling international trades. If that were to happen, inflation in the US would seriously get out of hand.

      1. the problem with moving to a currency other than the US dollar is there isn’t one to move away to.
        the only 2 that are even remotely liquid enough are the Euro and the Yen, both of which have issues as bad as the dollar does.
        the other options such as creating a digital currency has no backing from a central bank, and the other currencies aren’t big enough or convertible (CHF or CNY)

  15. Hi there, my income loving brothers and sisters! I bought some more tax free bonds as the yields are like manna from income heaven, to keep filling in my tax free ladder:
    Pilot Knob, Texas (Austin area) Utility District #3
    CUSIP 721573JE4 4% coupon due 2/15/32 @$99.071 to YTC 4.173% and YTW 4.107% BAM Insured Baa1 underlying and AA with the insurance.
    If you don’t find a way to make money while you sleep, you will work until you die. I am Azure

    1. Are you maxing out your Qualified Dividends? Tax free isn’t always the bargain it seems.

      Also, I bought some Agency Bonds today, also due 2032 with 5.9% yield. They are State tax free and are AAA rated.

      1. What do you mean maxing out your qualified dividends? Are you basing this on your annual income to get more favorable tax rate of 0, 15, or 20% federal tax? If one makes a million per year.. any QDI would be 20% no matter the amount collected right?

        So muni makes sense for really high earners up until a certain point where QDI would beat it if it yielded a certain bit more. This is without getting into the risks of each security. This is how I always thought about it. Am I wrong?

  16. KTBA trading with a yield of around 10.5% today.

    Experts getting the best deal just as intended when the expert market was created.

    1. What am I missing here? Its yield is 350bp above the underlying bond. Can anyone explain this??

      1. It is on the expert market (OTC) and thus we cannot bid on it. So when someone sells the only bids are from “experts” which get full access. Their bids are quite low. An expert is basically someone in the finance realm pretty much. We have 1-2 of those types of people here while the rest of us have not figured out a way to buy it. Sometimes rumors float around that some brokers allow mere mortals to buy certain securities on the grey/expert market but nothing I have found worth creating an account over.

        The key thing to know is that we are not allowed to see bid/asks but the brokers have kindly allowed us to place sell orders. Go figure. No buys.

    2. yeah, I had a ton of it but slowly dumped because of its change to the expert mkt….arseholes

  17. I picked up 300 shares of CUBI-F and 94 shares of ABR-D.
    I have this gut feeling that we will see the rate of inflation come down this month.
    Depending how much the rate slows down will determine the climb up.
    I want to purchase another 50K in Fixed issues before the next CPI.
    Any one else have this “feeling”?
    Good hunting, guys

    1. Yeah I think it’s coming down too Newman. Not sure if it’s wishful thinking, but continuing to nibble away. Rate hikes coming in Nov/Dec only thing holding me back from going all in now.

  18. New Guy Question……Would greatly appreciate thoughts on PFFD vs. individual holdings. I know this a very much “do it yourself” crowd, but is PFFD a bad move overall, or just one that results in paying that .22 fee which may reduce overall earnings? This would be for my Roth account where I currently have dividends dripping in free cash every week or so….$50 here , $20 there, etc…..so PFFD “feels” like a good way to build a holding where I can accumulate some shares over time in a diversified holding of preferreds.

    1. Biggest problem with PFFD is making relatively large transactions on low volume issues drives the price against them. Yet their rules require them to complete the trades and their managers don’t always plan ahead. People on here have made money trading aginst those movements.
      So you would do somewhat better to buy the preferreds yourself even if you just look up their holdings and buy them. But it is more work and you have to pay attention.

    2. I can’t comment on PFFD in particular, (I have used PFLD and PFXF) but I wouldn’t worry about the expense ratio. The bigger issue is where you think preferred prices will go with interest rates rising and talk of a recession. (Disclaimer: I am a buy-and-hold type, not a trader or a flipper.)

      Between ETFs and individual issues, I think an ETF is a good place to start if you are doing one issue and thinking of reinvesting. You are essentially buying an income stream backed by a basket of preferreds. There are pro’s to this.

      Pros –
      – Avoid single company risk (like that big hemp deal didn’t happen at Youngevity. Or a third world country refuses to pay for an LNG terminal.)
      – Potentially reduced industry segment concentration risk. (Gee, nobody wants any of my mREITs today.)
      — Reduced Odd Things Happening risk, (a solid company gets taken over and leaves you with a deeply discounted orphan preferred headed to the darkly-lit back alley of the Expert Market.)
      — No reinvestment risk when a stock is called away.
      — Avoid wide bid-ask spreads if buying or selling lightly traded issues.

      I prefer individual stocks, but I do use ETFs.

      Just my opinion.

    3. I had not considered PFFD before, but their holdings are solid – rated banks, insurance companies, and utilities. I hold many of the same preferreds. They definitely have possibilities.

  19. BOA has interesting bond with 2027 maturity SOFR + 1.40% cusip 06048W621 . max rate 6.5%. Moodys A2. Call protection= yes. Quarterly payments. New issue on Fidelity. SOFR on 9/30 was 2.98%.

  20. In case you do not follow European banks, Credit Suisse is getting significant press saying they are at risk of failing. Reuters story from today:

    ***************************************************************
    Oct 2 (Reuters) – Credit Suisse (CSGN.S) executives spent the weekend reassuring large clients, counterparties and investors about its liquidity and capital position, the Financial Times reported on Sunday.

    A spokesman for Credit Suisse declined to comment on the report when contacted by Reuters.

    Executives made the calls after spreads Credit Suisse credit default swaps (CDS), which offer protection against a company defaulting, rose sharply on Friday in an indication of investor concerns, the newspaper said.

    Credit Suisse five-year credit default swaps (CDS) jumped 6 basis point to close to 247 bps on Friday, the highest level in at least 10 years, S&P Global Market Intelligence data showed.

    Credit Suisse CDS began the year at 57 bps .
    ***************************************************************
    I had wondered why I kept seeing CS corporate bonds rated Moody’s A2 have considerably higher yields that Baa1-Baa3 bonds from other issuers. Looks like institutions have assigned a higher default risk which is consistent with the credit default swaps blowing out.

    As we all know, the issue is counterparty risk. If your trading partners think your financial word is no longer good, then you are toast. While we might think that CS is too big to fail, there is no 100% guarantee it would be bailed out. If they DID let it fail, we have Lehman Round 2 contagion wise. There would be many unintended consequences, likely spilling over into our preferreds/babys/terms. I am not suggesting taking any action other than be on the watch that a bad wind might blow in from the east. . .

    We do own ONE stinking CS corporate bond in one account and we going to leave that $1,000 payout at risk.

  21. “There is nowhere to hide in a world where all correlations go to one.” (Wall Street Week, October 2022) Nonetheless, I keep looking for the one ETF with the secret sauce. The all-around varsity athlete that plays all sports well and maybe hedges my long positions. (mixed metaphor there)

    My watch list is full of arcane option strategies, inverts, commodities and oddly pasted together ETFs with bond spread options glued to TIPs. Most don’t work really well. (You would think something called an “Interest Rate Volatility and Inflation Hedge” would be having a banner year.)

    As to Friday’s sell off…the S&P was off 1.55% and is off 25.2% YTD. Three ETFs from my watch list were positive during Friday’s sell off, but are not positive for the year. CVY. EEMD RING. Nothing to write home about there.

    Two ETFs that were positive on Friday were also positive for the year to date. Not yet taking the sauce bottle off the grocery shelf, just reading the ingredients list.

    Simplify Interest Rate Hedge ETF – PFIX
    +2.04% Friday
    +74.9% YTD

    AdvisorShares Dorsey Wright Short ETF – DWSH
    +1.9% Friday
    +32.5% YTD

    Other watch list winners, up year to date but not up on Friday, were a hash of commodities and managed futures funds. KMLM, DBMF, PDBC, COMB, BCI

    Caveat emptor. DYODD.

    1. Bear:

      I use HDGE when I want short exposure to the equities markets. It is a smaller ETF – about $150M. It doesn’t do anything VIX/volatility related. Just short a basket of stocks.

      It has obviously worked well in 2022.

      During the stock market (and Everything) Bubbles it was forced to do reverse stock splits. Certainly doesn’t need those now.

      https://advisorshares.com/etfs/hdge/

  22. Short term babys/terms looking good! There has been a lot of discussion about various babys/terms that have short term maturity dates. Up until a few months ago, most of these issues were priced to have low yield to maturities and in some cases negative. As the World Turns, all of them are showing POSITIVE YTM’s! And all of them are trading below their maturity payout price, which is a different way of saying the same positive YTM’s Here are all issues that mature in 2023-2025. It does NOT include many issues that are convertible. Some of them MIGHT be attractive, but each of them is a one off case that must be considered separately. Every one of the issues is past its first call date with the exception of TRINL, so this list assumes they will NOT be called before maturing. Also, I am showing that ALL of these are unrated by Moodys/SP.

    Format is: ticker, mature date, 9/30 close price, coupon yield, yield to maturity

    NOTE: the yield to maturity calculation is a formula and might NOT be 100% accurate with regard to the next payment. You MUST do a more precise YTM calculation before making any purchase decision. Also, you should consider whether the issue is a baby bond or a term preferred. Baby bonds are higher up in the debt stack and SHOULD be more secure. Of course if the parent gets into serious trouble they might default either way.

    PFXNL, 3/20/23, 24.84, 6.08%, 7.4%
    CNFRL, 9/30/23, 23.6974, 6.75%, 12.3%
    OXSQL, 3/30/24, 24.65, 6.5%, 7.49%
    RILYO, 5/31/24, 24.7, 6.75%, 7.52%, $25.25 call, $25.0 call on 5/31/23
    GECCN, 6/30/24, 24.6, 6.5%, 7.48%
    OXLCM, 6/30/24, 24.6, 6.75%, 7.73%
    SCCB, 6/30/24, 24.7, 7.13%, 7.86%
    NEWTL, 8/1/24, 24.81, 5.74%, 6.18%
    RMPL-P, 10/31/24, 24.8563, 5.88%, 6.17%
    SACC, 12/30/24, 24.06, 6.88%, 8.71%
    TRINL, 1/16/25, 24.95, 7%, 7.09%, First call 1/16/23
    GECCM, 1/31/25, 24.8, 6.72%, 7.09%
    MDRRP, 2/19/25, 22.75, 8%, 12.32%
    RILYM, 2/28/25, 24.66, 6.38%, 6.99%, $25.5 call, $25.25 call on 2/28/23, $25 call on 2/28/24
    AIC, 3/15/25, 23.49, 6.72%, 9.47%
    GDL-C, 3/26/25, 48.2, 4%, 5.55%, $50 par
    SBBA, 6/30/25, 24.9, 7%, 7.16%
    CSSEN, 7/31/25, 24.95, 9.5%, 9.58%
    SCCC, 9/30/25, 24.1936, 7.75%, 8.97%

    Other III’ers can speak to the credit worthiness of these better than I can. We own some on this list and might buy others.

    1. Thanks for the list, Tex – I had just noticed the drop in GDL-C after the close and thought it looked pretty tasty given its quality… However, looking over this list its 5.55% YTM by comparison almost looks too high. it does seem to stand out from the others credit wise though…

  23. I have a weekend homework assignment for all willing III’ers? If you know a real estate agent, check in with them and see how their business is doing. 30 year fixed mortgage rates broke 7.0% this week. A year ago it was under 3.0%. As we have discussed elsewhere, sellers are still thinking their house value is the same as 3 or 6 or 9 months ago. A slight disconnect.

    I am guessing most agents are seeing it slow down in real time. Has to be a spillover effect for the broader economy, hence lowering GDP. Plus the institutional buyers of single family have dramatically cut back. Interesting to hear any field reports . . .

    1. Pace of sales has slowed down but prices haven’t dropped much yet. There are regional differences. Here in Florida home prices were below average and now we have more than the usual influx of people leaving other places. Those two factors keep prices propped up more than other regions. New homes continue to go up because of the rising cost of materials and labor.

    2. Tex:

      Here is the latest housing commentary from my small-cap manager (PVCMX – who is 80% cash right now):

      “In addition to analyzing publicly traded companies tied to housing, we also monitor the local market, as Florida often leads national housing trends. Given how much of our local economy is tied to housing, it’s easy to find trusted sources on what’s happening on the frontlines.

      My favorite mortgage broker and realtor expert recently informed me business has stalled. He said many sellers are in denial as they refuse to acknowledge the environment has changed and continue to price their homes as if it were 2021. Meanwhile, buyers are struggling with higher rates and the feeling of being trapped by their current low-rate mortgage, along with relatively affordable property taxes. My contact also said refinancings have gone to zero. And finally, he said homebuilders are once again reaching out to realtors and increasing commissions. During the boom, he noted commissions fell to 1% as homebuilders didn’t feel the need to use realtors. Currently, commissions have increased to 3% (in addition to bonuses) as builders need help finding buyers. He noted that the commissions builders pay agents have historically been a very good indicator of housing demand.

      Another local housing expert I recently spoke with works for a leading door and window distributor. She confirmed the slowdown, informing me new orders have practically stopped after being extremely robust a year ago. She said, “We went from being unable to keep up with demand to getting 70% fewer orders almost immediately.” Her recommendation was to not buy a house. “When orders get this bad, things are about to crash!”

      With the housing market transiting abruptly from red-hot to frozen, we believe many businesses, investors, and policymakers will be caught off guard by how quickly economic trends shift. Once the new reality sets in and prices adjust, we expect the sudden slowdown in housing to place further pressure on consumer spending and corporate earnings. ”

      You can read the entire letter here:

      https://www.palmvalleycapital.com/post/let-s-get-nuts?postId=2628a7f9-19d2-46fa-acc4-b2983b38c086&cid=49e5a43a-598d-4e3c-a108-02c9f68d0491

      1. Rob, thanks for the SFH update. Those comments indicate to me that there will be a negative impact on GDP. If houses are not turning over, all of the furnishing businesses will suffer, not to mention the real estate brokerage industry. We need that NAR economist, IIRC David Lereah, that was the Bagdad Bob of the 2007-2009 housing crash. He was preaching from the mountaintop there was NO housing bubble!

        Unless the Fed U-turns and start QE’ing mortgage bonds, I don’t see a quick return to 3.0% mortgages that everybody got used to. . .

        Thanks,
        T2

    3. Tex – I seem to remember back in the early 80’s or so when some mortgage providers were willing to offer mortgage holders with relatively low interest rate mortgages an opportunity to pay off their mortgages at a discount to the principal amount due. Do you remember that? Does the current environment where mortgages end up getting sold by the original issuer and perhaps sliced up and diced up into tranches preclude that from ever happening again one day?

      1. 2WR, I was a little pre-occupied in the early 80’s and missed the mortgage company buybacks. Anybody that wants to change houses today has to be in a world of hurt. Payoff your 3.0% loan to get a 7.0% loan? Unless you are forced to move due to a job change, you are NOT going to do it. Not many people, maybe .01%, get an annual income boost to match the increased monthly payments. So everybody with a low mortgage rate is pretty much stuck living in their current house.

        I had this discussion yesterday with a young couple caught in the worst case situation. Signed a contract on a new $1M+ house which is being built before their existing house is sold. They are getting hit on both parts of the deal. New house was priced at the peak with 3% mortgages and has to be worth less today than the contract price. Old house is worth less because of the 7.0% mortgage rates. Imagine that many folks in that situation will just forfeit their deposit on the new house and stay put. Not a good time for buyers or sellers. . . .But we knew that the days of getting 20 offers OVER list price while waving inspections was “irrational exuberance” and could not last.

        1. Tex, you are speaking to me….Give up my 2.75% note? You will pry it from my cold dead hands, ha.

        2. If i did a mortgage today on my house, it would be over $7,000/month, but instead it is about $4,300 on my 2.5% mortgage. That is a considerable difference, and there is a lot I could do with an extra $3,000 per month. 🙂 Over the weekend our realtor had a party and invited the past customers. I did pull him aside to talk to him and he said he was busy, people are paying cash for houses, many folks are putting well over 20% down… I find that hard to believe.

          1. My brother is buying a house and says he’s paying cash. Planning to sell a bunch of stock and buy some of it back when his current house sells. Instead of getting a mortgage or even a bridge loan. Nobody wants a 7% mortgage.

            1. Martin said: “Nobody wants a 7% mortgage.”
              Some of us remember back when we would have been thrilled to get down to a 7.0% mortgage! It peaked in 1981 at ~ 18.5%. Maybe the 3.0% mortgages were the exception and the norm is say 7.0%? Or at least that much for the next few years. . . .

              The US is interesting in that apparently European’s are not offered 30 year fixed mortgages. They have to do shorter notes which is part of UK’s blowup last week. A significant number of holders are going to have to roll their notes and cannot afford the new rates. Kind of like variable mortgages in the US that are going to reset higher.

              Maybe we should NOT be cheering those 5% bank CD’s if it makes mortgages be 7.0%. Guess we should have been happier with 0.5% CD’s and 3.0% mortgages.

              Historical 30 year mortgage rates:
              https://fred.stlouisfed.org/series/MORTGAGE30US

              What a mess . . .

              1. Tex, I have been to Germany several times over the last 25yrs for my wife’s family reunions. One of my interests about Germany was home ownership. I asked people in Germany what was the length of a home loan. I was told 50yrs. Homes there are very expensive. Course part of the reason is how well they are built. Brick construction compared to 2 x 4’s

              2. When buying my house many years ago I took a 8.75% take over mortgage when the rates were 12% and rising. The high interest rates resulted in many foreclosures and slow sales. The previous owner was 3 months behind in payments and the bank was so happy to hear I was taking over the mortgage the only information they wanted from me was my name. These current rising rates will result in bad times for the real-estate market.

              3. Tex..I guess the difference between cheering or booing depends on whether you are looking to buy/sell some real estate or looking to put some money in the bank.

          1. Bill. It is where you walk into a building and ask for a million + dollars (legally, and you don’t have to use a gun, masks, and money bags), and then they say, “ok, let’s see if you can pay it off in 20/30 yrs. Then 3 weeks later after providing and signing about 30 pieces of paper, including a document that if you don’t pay, you will sign over future grandchildren, you get the keys to the house. You don’t get to see the million dollars, other than the valuation of your house on yet another piece of paper. :-).

            1. Ah yes, now I remember that thing. I recall we had a backyard party and set it afire about 10 years back. Thank God and Greyhound it’s gone 🙂

  24. Does anyone have an opinion about Travel Centers of America (TA), three baby bonds: TANNI, TANNL, TANNZ?

    1. Another person posted a recent purchase right at par. The small discussion was basically this.

      Times are good for them. Making money due to fuel margins. Have cash on hand. All of them are callable and all their debt matures in a 3-4ish year period in 2028-2030 including a bond I think. Nobody understands why they don’t call something to reduce debt. They could make a large purchase and burn through a lot of that cash which could be good or bad based on execution. Historically they do not make as much as they do now margin wise. Current execution on other sources of income is so-so but improving. Naturally they need to reinvest in their existing business and find a way to make more from them.

      I visit their Greenland, NH (near Portsmouth, NH) location when I travel up to one of our offices. I find the place busy with truckers. Pretty clean. Good prices. Food is appealing for a quick bite. Showers. Sell everything under the sun. Country Pride restaurant attached for something better to eat. So I find it more appealing then other gas stations right near by.

      I do not own any BBs from them. I think it is a somewhat safe bet but I have not convinced myself to make a purchase. Below par 200 shares might get bought for the high risk bucket. No hurry to pull that trigger.

      1. Hey fc, welcome to the Seacoast. Some years back, there was a report in the local paper about that facility regarding less savory activities taking place in the parking area – appealing for a “quick bite” with with a much different connotation.

    2. Made good $ from them in the last 2 years, but this year the market has trashed many good terms and baby bonds that I thought would remain pinned to par. I have played the bounce between TANNZ and TANNL since they have ex-div dates 6 weeks apart (sell one, wait about 2 to 3 weeks, buy the other). I don’t own any right now, and I’m concerned there will be a sell-off in TANNI, etc. to buy lower priced, higher yielding, and higher rated preferreds with the potential for capital appreciation at some point in the future. When things stabilize, I might get back in them.

    3. I was in them awhile back, but got out when travel dropped. I thought with the advent of electrification these centers are going to take a hit in capX and upgrade efforts so I got nervous about TA’s standing with debt etc. So I’m still in the avoid camp.

      1. Not to worry, they will just install a bunch of chargers and make more on the electricity than they did on the gasoline. Not only that, while folks are there for hours waiting their turn to rent the charger, their convenience stores and on-site restaurant’s will make a ton more money with such a captive audience.
        Actually I have a little bit of TANNI, at 8% not sure either why they haven’t called all 3 issues in. I thought for sure they would about 3 years back when they sold off some stores and had about $300,000,000 cash from the sale, instead they bought more truck stops and remodeled existing ones. They are managed by the RMR group and somebody said that was not a good thing, but I don’t know why that would be.

  25. Did I miss the RZA redemption notice, following the tender?

    Is RZC trading anywhere? Not yet at Fidelity.

    1. I have been anxiously awaiting for RZC – but have not seen it trading yet. Not sure why the delay

    2. Life insurance companies all report an increase in the number of claims. The cause is debatable but the fact is undeniable. Insured people are dying at a statistically significant higher rate. If that trend continues this may be a sector to avoid.

      1. Martin, Boomers are starting to cross the finish line and represent a statistically significant “bubble” in the population. We’ll-managed life insurance companies are reserved for this phenomenon.

        Related and equally interesting is that people are living longer than actuaries planned for decades ago…meaning it’s actually pension funds that were in many cases under-funding and are now in catch-up mode. Hoping Martin that you and everyone else here is making that task hard on them. 🙂

  26. I had those as well and sold earlier this year. I just did a calc and please know that since it is selling at a premium, so (obviously) the return is less than the yield. I assumed buying today at 27.06 and holding until it’s called. You get a return of about 7%. That’s not bad, but if you can get it lower you can really juice your return.

    1. eoz – If you’re talking about WCC-A, a conventional bond yield calculator would give you a yield to a call on 6/22/2025 of 7.30% if purchased today at 27.06 taking into account a couple of days of accrued. Just being able to lower the purchase price by 13¢ would jump your yield to 7.50%

      1. WCC-A Is an interesting situation, but I am concerned that a “rating agency event” could allow them to call in the issue…thus enabling them to avoid the 10.6% for 2 1/2 years…..ya think my fear is justified?……Thou it does appear that they would have to pay a 1/2 point premium to do it.

        1. Mathty, this comes up frequently, because we read this and interpret it in a manner that it is not intended. It is best to skip the convoluted definition and get to the brass tacks. Here is a good example.
          Rating Agency Event means a change to the methodology or criteria that were employed by an applicable nationally recognized statistical rating organization for purposes of assigning equity credit to securities with features similar to the Series A Preferred Units on May 17, 2018 (the “current methodology”), which change either (a) shortens the period of time during which equity credit pertaining to the Series A Preferred Units would have been in effect had the current methodology not been changed or (b) reduces the amount of equity credit assigned to the Series A Preferred Units as compared with the amount of equity credit that such rating agency had assigned to the Series A Preferred Units as of May 17, 2018.
          ……See everything comes down to “credit ratings”. This is why companies issue
          preferreds. Its capital on the balance sheet, but credit rating agencies generally assign about half of it as debt and half capital for credit rating purposes. So the rating event would be if say Moodys changed their ratings criteria where Company A’s 50% equity treatment of preferred, suddenly became 10%. This could upset their credit applecart causing them not to be in compliance of certain debt covenants. So this “ratings event” clause allows a company a way out to redeem issue since it isnt serving the intended purpose it served at issuance.
          This is also can be put in bank preferreds which are issued for specific regulatory Tier 1 capital purposes. If any legislation or ratings event cause the issue to be not deemed eligible for Tier 1, this clause allows a bank to bail out and redeem.

          1. Well said, Grid….. I took a stab at this explanation a while back but mine was much more vague and had holes in it.. Leave it to Encyclopedia Gridtannica to fill in the details..

            1. I saw your post, 2WR. I thought you did just fine. No reason for me to say anything there. I was just sparing you a repost this time, ha.

  27. Was notified by Fidelity GNT-A being called 10/26/22, but cannot find any info beyond theirs.

    1. Not true… I checked with Gabelli… They were aware that Fidelity has erroneously put out a call notice…. It was done in error… no call happening

  28. If anyone has any other “EP-C” type securities that kind of go under the radar because they are not baby bonds but not a perpetual preferred stock either in reality due to unique circumstances or even are just obscure such as SPLP-A but have a definitive redemption date, please share here. Thanks!

    1. If you’re not looking for issues trading at a discount only how about WCC-A? It’s a 10.625% coupon that was issued in conjunction with WCC’s huge acquisition of Anixter. It was not originally priced by market forces but by formula off of the price of notes issued at the time of the merger… Not only is it 10.625%, it will reset (annually I think) at 5 yr USTreas + 10.325 if it makes it passed 6/22/25 which of course it will not. WCC’s been killing it as a company since this merger and I think they’ve reduced debt by over $1 bil more than they projected since the June 2020 merger based on original assumptions.. Moody’s has taken note and upgraded the notes a/o Sept 16 to Ba2. I did not check S&P or Fitch. The preferreds are not rated but by implication would be one or 2 grades below that so no less than B1. Last trade was 26.91 which would be 7.65% YTW to the 6/22/25 call… for the record, I think current yield is 9.87%. Not bad for a 2 1/2 year “maturity.” Cumulative and qualified to boot.

      1. I have had these since they came out. I keep them to remind myself that I once made the right decision… long ago… before all of this downturn started.

        The hard thing now is watching prices go down, even when you know you will be OK a few years down the road if you hold fast.

      2. WCC-A If I understand this can be called at $25.50 before 2025 if a rating event occurs. Might you help me understand if this security is at risk for an early call? Thank you

        1. P – I’m not about to say I completely understand what the “rating event” means, but I think it has to do with nothing specific to the company per se. It has to do with how the rating agencies treat preferred shares on balance sheets. Apparently part of the benefit to the company of issuing these shares has to do with how they are treated as equity or partial equity. I think what the possible call under a rating event has to do with is that criteria of treatment being changed at any time in the future…. I don’t think that’s much of a possibility but perhaps someone else can weigh in as well. I am discerning this from the definitions within the prospectus

          (cc) “Ratings Event” shall mean a change by any Ratings Agency to the Series A Preferred Current Criteria, which change results in (i) any shortening of the length of time for which the Series A Preferred Current Criteria are scheduled to be in effect with respect to the Series A Preferred Stock or (ii) a lower equity credit being given to the Series A Preferred Stock than the equity credit that would have been assigned to the Series A Preferred Stock by such Ratings Agency pursuant to its Series A Preferred Current Criteria”

          (ii) “Series A Preferred Current Criteria” shall mean the equity credit criteria of a Ratings Agency for securities such as the Series A Preferred Stock, as such criteria are in effect as of the Original Issue Date.

          I don’t believe it’s of much concern regarding possible use but you never know…. But if you’re concerned about calls prior to the first optional call, then you might as well be concerned about the Change of Control callas well… Again, I consider the odds of WCC being acquired as low enough as to not be concerning…. and again I could be wrong…..

      3. I second the change of control risk on this preferred. If they get bought out, this preferred issue will very likely be called at $25 per share and you will take an immediate 10% loss. Remember the CAI preferreds? Lost a bunch there.

    2. theta, Use Tim’s list right here. Use drop down in banner up top, Master List and just peruse the Maturity Date column, good to use in conjunction with QO to dig into details.
      PS: I bot some Ep-C here too, now will sell off the sliver of KMI common as needed. Move UP in tranche and income coverage!

    3. Bought EP-C today @ $44.25
      Distribution 2.38 per year
      If I hold to maturity (3/31/2028) thats about 5.5 years ~$1 per year capital appreciation
      With an adjusted distribution of ~3.38; that’s approximately 7.5% a year.

    4. Actually I prefer no redemption date to long dated redemption because any redemption date makes it not Qualified Dividend. 15% or so difference in tax liability. A very few issues have escalating floating rates which essentially provides a redemption without losing QDI.

      1. Martin, that is incorrect. Just because it has a term date does not automatically negate its QDI treatment. There are other factors in play that determine tax treatment. The reason specifically why EP-C is not QDI is because its debt.

  29. I am seeing some decent bond rates from Canadian banks on the Schwab platform. Not yet high enough to buy, but getting close. Last ones I saw were around 4.5%. My question is, will buying one of these put me in income tax hell even though it is within a traditional IRA ? I have researched it a bit and it seems there is some sort of agreement on taxation, but I have heard some people say it is not worth trouble for the little extra interest. Will this require Schwab or myself to file an extra tax form ?

    1. Bill S. it puts you into currency risk hell. It has been unusually trashed against the dollar for quite a while. Look at a 10 year chart. It could reverse under regime change, but personally I’d wait until after their election.

  30. Will UMH call UMH-D in January 2023? UMH did mention wanting to call all preferred shares earlier in the year and did raise capital via an Israeli bond issuance But with their recent purchase of the South Carolina Community, I am thinking they may have repurposed the funds from the bonds for this purchase.

    from their Q4 results announcement earlier in the year:
    “Subsequent to year end, we sold $102.7 million of 4.72% unsecured bonds in Israel. This capital, as well as capital raised through our ATM and other sources, will be used to redeem our $247 million 6.75% Series C preferred stock in July of 2022. In January of 2023, we can redeem our $215 million 6.375% Series D preferred stock. These transactions will drive incremental FFO growth. We are well positioned to execute on both of these redemptions.”

    1. Probably why it’s holding near par. I had it at $25.25 and added below par to get my average right at par now…hopefully, they won’t call it but at least I am not at risk.

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