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.
Tim
U OK?
We all care for you.
Westie—I’m good–just busier than a 1 armed paper hanger–wish my business would go away (I know some folks love more ‘business’—me I am fine with just a little).
Until Mr Market enforces some kind of discipline on sovereign nations with their
Super high Debt to GDP ratios, they will just kick the can down the road and solve it. The US collects a ludicrously low amount of tax as a percent of GDP and could easily shoulder a higher tax collection by removing some of the distortions like the exemption on tax exempt debt.
But the bubble in the Chinese real property market is WAY worse in terms of economic damage that is going to be caused and could lead to the fall of the CCP, as the populace doesn’t get to vent their anger at the ballot box.
We could almost certainly shoulder a decrease in spending.
I think tough decisions on both the inflow and outflow sides need to be made.
I agree, but I have trouble recalling a ‘tough decision’ being made, other than pushing the issue further out(say beyond election day).
Doug, I agree also the solution to our debt problems lie with changes on both revenue and expenditures, but no politician has ever been successful getting elected on a platform that calls for higher taxes! The typical voter will tell you our taxes are way too high…… In reality taxes are at historical lows!
This is reaching into that political hot potato nonsense that we try to avoid here.
Thanks Rocky_Mountain_Hiker
Ready for something different?
With all the comments on CD and Treasury issues, the recent tone of III seems decidedly conservative. If you are less risk averse the following may be of interest.
TELL (Tellurian Inc) is in the early stages of building a LNG export terminal. TELL’s Driftwood LNG project is fully permitted by the EPA. The DOE has licensed Driftwood to export LNG for more than 25 years. TELL has spent several millions on construction but has not yet reached FID (Final Investment Decision).
TELL is attempting to turn the corner, declare FID and build/operate the Driftwood LNG project. In the last two months several factors make this more probable.
1) Early December 2023, the Chairman was replaced by the company co-founder.
2) Late December 2023, Lazard hired as financial advisor.
3) Late January 2024, Biden pauses approvals for pending and future applications to export LNG from new projects.
4) Early February 2024, TELL explored sale of upstream assets and business.
5) Last week, TELL received a FERC extension for Driftwood LNG completion till 2029.
These factors prompted my purchase of several thousand TELL shares at a price below $0.50 a share. In the past two weeks the shares have appreciated over 80 percent. TELL has stated they anticipate reaching FID in the next few weeks. TELL shares could be valued at 3 to 4 dollars when, or if, FID is declared.
There is a distinct possibility that the 2023 third quarter “Going Concern” warning could signal the collapse of TELL but I believe there is a reasonable case for Driftwood’s success.
TELL has a 8.25% senior note, symbol TELZ, due 2028. It pays 13.93% as of Friday’s close. I believe TELL is better positioned to benefit from a FID than TELZ.
Last year an III reader posted a brief comment on the public listing of MNR (Mach Natural Resources LP). Whoever it was, thank you. I purchased several hundred shares in the low 17’s. Last Friday MNR announced a cash distribution of $0.95 for the fourth quarter. MNR closed at $17.27 the day prior to the announcement. The annualized cash distribution amounts to over 20 percent. Of course one quarter is no guarantee of future earnings.
As always, DYODD. Regards from Thailand.
Bob
The original guy behind tell was originally a key executive at LNG. In that capacity he paid himself and his brother massive bonuses when the company was licensed to produce lng.This guy is far from shareholder friendly. I strongly advise you to look closely at what goes on in TELL as the same thing may well happen.sc
Anyone know where Allstate announces the current rate for ALL-B, now that it’s floating? I’ve poked around google and https://www.allstateinvestors.com/ and can’t find any mention of it.
https://www.preferredstockchannel.com/symbol/all.prb/ says it’s now 8.69% but based on the interest I received in January I infer a rate of 9.02% (not complaining). Anyway, I’d rather read it from the company itself.
search for “libor-linked”
https://www.allstateinvestors.com/static-files/22d8ce91-6b1a-45fa-92ac-784599569b68
The key to skiing in uneven terrain is to be over your skis.
The idea behind the thought is, when you don’t know what is before you, you need to be prepared for anything.
To do that, you have your weight centered.
We are investing in very uncertain terrain.
Political: Deeply divided Congress has two working days to pass 10 budget bills
Geopolitical: the Houthis are wielding increasingly sophisticated weapons supplied by Iran to close the Red Sea to traffic
The Fed: no change, decrease, maybe (gasp) increase
Are you over your skis?
I spent the long weekend going through my portfolio.
As I’ve mentioned before, I’m:
5% Cash (earning 5%)
40% T-Bills/CD’s (5.3%)
40% IG (cheating to include ENB, AQNB, and CHS ) (7.4%)
15% Below IG (8.2%)
That allocation fits my personal risk/reward appetite.
If the market goes up, down, or stays the same, I’m good.
When I first came onto this site, I was impressecd and intrigued how often Tim said “I’m planning to do nothing today.”
That’s me.
I feel over my skiis.
We’ll see if that holds.
Westie I have learned a lot from your contributions here thank you.
Interest on the IS National Debt will exceed defense budget this year
https://www.schiffsovereign.com/trends/interest-on-the-debt-will-exceed-defense-budget-this-year-150152/
I read somewhere that we are now adding $1.7 in debt for each $1 of GDP “growth” we are getting. If true, that sounds like the US has become a massive wealth destruction machine. Other places I have seen a ratio closer to $1.7/$1.6
Add in inflation, unfunded mandates etc… and it is clear the present course is unsustainable.
Scott—I agree that the present course is unsustainable. However, Congress (both GOP & Dems) have no interest in even addressing this situation. None whatsoever! Consequently, I think it eventually might take a black swan event to force the issue. The question is how far down the road will the “can be kicked” before we are forced to rectify an unsustainable course. We can’t grow the economy with an aging workforce and limited immigration. That’s basic Econ 101.
The only other possibility, IMO, is for the U.S. to become like the Japanese economy and have low or no growth forever. Sort of a post-capitalist economy that tend to be on the socialist side regarding benefits–such as a national health care system. This will require raising taxes across the board—national sales tax, higher income taxes, higher state sales taxes, etc.
Does anyone on the site see another solution. I’m all ears.
To me it won’t be a black swan event at all. Just the good ol’ American Eagle flying directly into the sun. Kapow! When the Fed loses control of the long end it will be game over.
Have you ever tried to reconcile published figures for the US deficit with increases in national debt (cash basis and not accrual)? The deficit is always lower than the increase in debt because Washington DC doesn’t want an honest account.
My broker suggests that the analysis of credit spreads needs to begin to allow for the possibility of credit downgrades for US debt: maybe some corporate debt is more credit worthy than the US government?
Washington won’t renounce its fiscal morbid obesity until an intervention forces the issue: a credit downgrade or strong evidence of US debt crowding out corporate investment. A significant contributor to this process may prove to be decreased interest in US debt by foreign investors? What is the alternative to US sovereign debt?
I just found this website and really like the preferred stock table. It saves me a ton of time.
I’m returning the favor by bringing to your attention a little gem you may not be aware of. I’m reposting something I posted on Reddit a month ago.
I’ve been trading in stocks for several years and recently began doing research into various fixed income options. I found a little gem recently that I wanted to raise people’s awareness of. The fund is Barings Corporate Investors, ticker is MCI. I own shares but otherwise have no affiliation with the fund.
[This is not financial advice, and I am not a financial professional.]
I’m posting because I’m just amazed at the track record. Over several decades it has beaten the S&P while being half as volatile. It’s been on the NYSE for 50 years and it has only had a negative (NAV-based) return 2 of those years. [Throughout this post I’ll be using NAV-based total return to discuss the performance.]
Its business model today is primarily issuing private loans to businesses (Bank Loans) with direct liens against the company’s assets. These loans generally have floating interest rates based on prevailing interest rates, so their profits have increased recently due to rising interest rates. It does exceptionally well during times of elevated interest rates, but even during the “free money” lunacy of the 2010s it still had an annualized return > 12%.
Morningstar tracks over 27000 Mutual Funds, ETFs, and CEFs, and of those 27000 funds MCI’s performance is #1 in terms of long-term (10-year) Sharpe Ratio. (The Sharpe ratio is a measure balancing a funds overperformance to its volatility [i.e. reward versus risk]).
It was first listed on the NYSE in 1973 and of the 50 calendar years from 1974 to 2023 it has only lost money twice:
— In 1974 (Following collapse of the Bretton Woods global financial system) MCI lost 5.6%; the SPY lost 26.47% the same year.
— In 2008 (year of Lehman brother’s collapse) MCI lost 10.34% while the SPY’ lost 37%.
Over the 3 years from 2000-2002, when the stock market was handling the dot-com bust and then 9/11, MCI investors saw a (cumulative) gain of 19.1% while the SPY lost 37.6%.
Across the 50 calendar years it has been on the NYSE, it’s beaten the SPY on average by about 1.6 percentage points annually: annualized compound growth of ~12.8% versus 11.2%. (The 12.8 is an approximation—prior to 1980 it is laborious to calculate total return each year. The earliest SEC filings I can get provide 25-year annualized data from June 1978 to June 2023.)
[I’m comparing MCI to SPY because there is a pervasive belief that the stock market shows better growth than fixed-income, and MCI shows that is not necessarily the case.]
If we exclude the 70s, which were not good for the S&P, and start from 1980 (A great year for the stock market) and go through 2023 (another great year for the stock market), MCI’s still outperforms the S&P by 1.25 percentage points: 13.17% vs. 11.83%.
The fund had its inception in 1971, but it actually has roots going back far into history, back to the Louisiana purchase. (That is a fun story itself, which you can read about on Wikipedia [Barings Bank].
Questions:
1. Why would you pick MCI over MPV for a new purchase, given the difference in premium?
2. When and how does Barings normally announce the new NAV? When are you expecting that announcement?
Hi David,
Those are _very_ good questions!!!
The truth is that at this moment I would also choose MPV, and in fact that is what I buy now with new money. Their portfolios are nearly identical. Undoubtedly, they had different histories; but my sense today is that they are effectively the same fund. I did not mention that in my post because I was trying to keep things simple and MCI is the fund with the very long track record.
In terms of update to NAV, I’m expecting the annual report will be out March 8th or March 15th. We will likely have to wait until then for the newest NAV.
This is just great. I ran a ytm in Excel and compared the result to FIDO’s calculator – exact match.
Thanks
Thank you all
My sincerest thanks to all for your heartfelt support. III is a wonderful community so much greater than just an investment site… I’m so proud to be a part of you all
Wishing you my condolences, My wife is moved by your expression of love for the one you lost.
A dear friend just lost his wife last week, so definitely understand your loss. My condolences and best wishes to you. And it is great to see all the support extended to you here in the III community.
2WR,
My condolences to you.
And the choke in my throat is me thinking of it.
I too lost a dear one recently and I miss her so.
Be well
CRE
For those with nothing to do on a long weekend; or
Those who like deeply analytical papers; or
Those worried about bank exposure to CRE; or
Worriers in general…….
The paper below will fill the bill
https://www.nber.org/papers/w31970
The writers wouldn’t get their essay published on SA. 36 pages with constantly repeating the same lines, they should have had a group review and tightened up their writing. Wasn’t until page 6 & 7 did they get to the start of their analysis. I find it interesting they say they don’t have access to CBMS loan information from banks so they used CBMS from the equity markets and compared to the Great recession which historically going back to 1998 have had equal default rates to banks.
Maybe this time it’s different? Been reading about the shadow banking Crisis in China. Could it be this time around Private Equity like Brookfield and Blackstone and others be in more trouble than the banks? I read that the Chinese Government has shut down several of them and is offering investors 80% to 40% back on the Yuan. These lenders were involved in the building boom that has collapsed there.
https://www.msn.com/en-us/money/markets/chinese-financial-conglomerate-zhongzhi-declares-bankruptcy/ar-AA1mvnAg
Can someone share a good YTM formula with me?
I think I’m pretty good with Excel but I keep striking out with its Yield and YTM financial formulas.
I believe I’ve stumbled on a good opportunity but I want to get my numbers right before I share it with you all.
Rate(# periods, pmt, (pv), fv)
Provides interest rate per period
pmt is qtrly coupon
ensure pv is negative (outflow)
Might look like this:
RATE(D49,D48,-D44,D41)*D43
…where “Coupon” below is D40. (Par Value is D41 etc).
Yield to Maturity
Inputs
Coupon 4.20%
Par Value $25.00
Years to Maturity 38.947
Freq of Coupon Payments 4
Bond Price $15.34
Intermediary Calculations
Coupon per Period $0.26
Number of Periods 155.79
Outputs
Yield to Maturity 7.1491%
Be sure to let me know if you have any questions Westie and good for you for pushing the envelope.
This might also help:
Years to Maturity is Total Days/365
D45, D46, D47 are formatted as blank
D50, D51, D52 are formatted as blank
Coupon per Period is D48, and
D48=D40*D41/D43
D53 (Yield to Maturity) holds the RATE equation
Again – just let me know if you get hung up on any of it.
https://basicexceltutorial.com/how-to-calculate-ytm-in-excel/
I use excel to calculate it. I could email you a spreadsheet of you want it.
There are a couple different ways to skin that cat, but I just use the XIRR function in Excel. I also keep an ancient financial calculator around if I ever want to double check something if I think it looks weird. 🙂
Anyone know where Allstate announces the current rate for ALL-B, now that it’s floating? I’ve poked around google and https://www.allstateinvestors.com/ and can’t find any mention of it.
https://www.preferredstockchannel.com/symbol/all.prb/ says it’s now 8.69% but based on the interest I received in January I infer a rate of 9.02% (not complaining). Anyway, I’d rather read it from the company itself.
I lost my white rose Thursday. Invest now in hugging your loved ones
https://www.youtube.com/watch?v=euG-STVXZhg&ab_channel=AndersonEast-Topic
Mi dispiace, con tutto il cuore.
Fabrizio
I am very, very sorry to hear that. What terrible news.
Deepest condolences from my family to yours.
So painful. My deepest condolences.
Jay
my deepest sympathies and condolences on your loss.
My sincere and deepest condolences to you and your family.
With kindest regards .
I’m so very sorry for your loss. Sincere condolences to you and your family.
With kindest regards.
I am very sorry for your loss. I will keep you in my thoughts.
I am so sorry for your great loss and wish you and your family strength and understanding at this difficult time in your lives. Sending thoughts and prayers, A
2wr
My deepest sympathy.
They are all that is important in life.
So very sorry to hear this. My condolences to you and your family. May loving memories bring you peace, comfort, and strength.
I am so sorry to hear of your loss. My sincerest condolences.
Sorry for your loss. Condolences to you and your family.
My deepest sympathy for your loss.
Sorry to hear that.
My sincere thoughts and condolences, friend, we come like the rain and are gone like the wind, be weak, be strong and be well – love is forever and yours is as well.
My condolences, thoughts are with you and your family.
So sorry for your loss. My deepest sympathy and condolences to you and your family
So sorry for your loss. My condolences to you and your loved ones.
2WR – incredibly sad news. My best wishes for you and your family.
How very sad. I will pray for you and your family.
Joining the community here in conveying my condolences. Be well.
My very best wishes to you and your family.
So very sad news. Our condolences to your family.
I am so sorry for your loss2WR. Sincere condolences.
Praying that you find peace.
My thoughts are with you and your family.
Enterprise Products Partners – EPD K-1 Delayed
Received my 1099 from my brokerage yesterday so I thought I would check up on latest status of my one and only K-1 which is issued by EPD. Well, I can set my tax software aside for now as EPD pushed the K-1 release date back from February 29th to March 30th due to pending tax legislation which may affect their corporate taxes for 2023. I know that many on this site have investments of EPD, thought you would be interested.
Here are the details in case you missed the release: https://ir.enterpriseproducts.com/news-releases/news-release-details/enterprise-provides-update-2023-k-1-availability
I have a total of 3 MLPs left. Used to be 4 but MMP is gone. For however many years now I have given up even thinking about doing my taxes somewhat early. I cannot remember the last time I was done before March. On top of that even the brokerage accounts sometimes revise documents and output a newer one. Everything is becoming so ?complicated? now days that an April 15th deadline (Maine and Mass get to the 17th due to a holiday) seems optimistic. We are really due for a simplification of federal taxes so the delay in documentation is not such a big deal but that may touch on politics so I will shut up.
Lots of Q4 bank stats. I like the author.
https://www.thespreadsite.com/bank-stocks-charts-data-4q23/
Thanks R2S
KRP is coming up on it’s dividend announcement. Oil futures have been climbing now approaching 80 a barrel. But people have to remember the dividend is based off the last quarter.
I think Azure and Bea and a few others have bought it in the past 30 days in the middle 14’s
I may or may not sell after the x-div date. This qtr. Is shaping up to be pretty good for the next payment 3 months from now.
DYODD
Thanx, Charles
$14.59
Am I the only one who is now having problems finding investment grade preferred that pay > 6.5% with a yield to worst that matches? I follow most every conversation here so yes I added to CTA-B but when screening I am not sure I want to add things like ATH-x or a bank like BOH. I am seeing quite a few options at 6-6.15% but nothing stands out as a superior choice for a preferred that is QDI with cumulative being a nice kicker. Any ideas someone wants to toss out that they got their fill and can share in case it is illiquid? I am sensing patience might be in order right now unless you are very happy with a solid 6%.
CNPWM
Just bought 50 shares,
Qualified div $2.09 / $33.36 yields 6.27%
Eladio,
I was looking at all the ills today but as you mentioned 6.1-6.3% was about the best I could get buying at the ask. I was hoping for a bit more.
FC, The illiquids are tight and compact and everyone is just squatting right on that yield area. If you are wanting IG and no banks, you could sniff around on the BEPI and BIPI which are plus 7% and way under par. I have considered them myself, but I just am in no mood to buy anything I dont want. The yield spread between quality IG perpetual preferreds and throw your money in the CD/TBIll and chill coffee can is almost non existent to 100 bps. The “The TBill and Chill” yield is just begging people to hideout of there if they dont want any risk.
Im pretty much set up monthly out to 5 years with half my stash. And every month when something matures and I dont see anything I want, I just roll up in a safe instrument and wait for next month. I will look to flip things, but in my comfort zone I would be flipping 4 quarters for a $1 bill right now. Until something breaks lose.
Sooo the point is. Take your Tbill and chill, or serve up another helping of 6.2% spinach and clean your plate before you are allowed to leave the dinner table!
PS…What the hell happened to TDS today?
Huge goodwill impairment charge at TDS. Earnings today.
I cant believe all the SA crazies thinking those TDS preferreds are going to be taken out at par if they sell US Cellular. The more likely happening is cash payouts and preferreds left outstanding with a smaller weaker company.
The bond underlying GJH didn’t budge. Good to see.
Non cash impairments apparently, Maine. They actually raised the common divi a penny today.
Grid, I decided to peek. Almost a 25% drop in one day. Good thing it’s Friday and a 3 day weekend for a cooling off period. If it had been earlier in the week I could see it open the next day even lower.
Grid, QOL shows BEPI and BIPI are debt securities, it further shows income from these securities (interest) is qualified. Does this make sense?
I also assume that Canada withholds tax from BEPI distributions. Correct??
MFZ, yes some kind of quirky provision makes it QDI. These should be viewed as preferreds in terms of relative safety though. I cant say with certainty whether you avoid the withholding or have to claim it come tax time.
how about the baby bond ZIONO ; BBB rated ; floater 9+ % yield
might get called but ;its trading near the stripped price?
Ted, I suggest you look in Fido bond search and see what Zion bonds are selling for. They are up from several months ago but compared to other banks bonds they have a pretty high yield. That to me tells me the market ( investors) think of them as a higher risk investment. I decided to sell my ZIONL and reinvest it elsewhere.
But to each their own risk tolerance
Just loaded up on Brighthouse Financial (Insurance). Went with the 4.625% callable on 12/25/26. Picked them up for 16.13 for a yield of 7.17%. Rated BBB-. Credit to Tim and mSquare for the alert.
fc, For preferreds, have found much better adds occur if you’re willing to wait it out, then buy heavily when market panics and “knows” rates are headed one way or the other. Loaded up/averaged down relentlessly in March 2020, May 2022, 2nd 1/2 of 2022, March 2023 and went 2x on holdings in October 2023.
Haven’t bought in months now and finding little solace in borderline issues solely to add something with yield and will not average up price of holdings nor compromise on overall A-rating of current holdings.
There’s always another event. Best wishes.
Alpha, Not the greatest yield for the trade but I did add some of the CTA-PB I also sold the last of my EFSCP for what was equal to the next dividend. I did buy a little BMY other than that I just am sitting watching.
This BDC chart was just shown on SA
Very useful
https://cefdata.com/bdc/
Westie – This is really helpful, thanks for posting! I have 4 BDC’s in my income portfolio and it’s nice to see how they stack rank against their peers.
Qurate and QVC are disliked by the market. QRTEP is paying 19% and QVCC 12.45%. They make regular payments. Although the BB and Pref are down significantly the 4.85% $1000 bond went up 24% in less than a year.
It will interesting to hear what they have to say at there next conference call Feb 28.
A decent amount of bond interest and dividends hit the account. More due March. April doesn’t look so good. Any suggestions here on what would be a good purchase to fill the gap?
CM mothly paying muni funds work for Me
Any particular ones you like?
irish,I got a full allotment of a Nuveen closed end fund NXP no leverage good credit solid fund been around for years
Has anyone received their NMFCZ distribution?
(And does anyone know what the ex date was?)
Hi David, NMFCZ are New Mountain Finance Corp 8.250% Notes Due 11/15/2028 and as notes are not declared like a preferred. I have these notes in my Vanguard account and always get paid the day after into my account. This is the first time NMFCZ has paid so sometimes there will be a slight delay. You will get “paid” quarterly on 2/15, 5/15, 8/15 & 11/15 until at least call date of 11/15/25.
Hope that helps, A
How did this get a Baa3? Their current debt load appears to be 70% more than their entire market cap and they don’t even have $100M cash on the books.
Good read on the apartment lending market, focused on Arbor Reality Trust
Late Mortgage Payments Pile Up For Giant Apartment Lender
https://www.wsj.com/real-estate/late-mortgage-payments-pile-up-for-giant-apartment-lender-a2b008d5?mod=hp_lead_pos11
Many thanks for the ‘heads up’.
Sometimes I wish I had the time to actually review the data used in the article which I do not have a subscription for. So I can only see the chart and first paragraph. For example the chart shows a percentage of CLOs that are delinquent 30 days or longer. Without knowing how much was borrowed in that approx 9% of loans matters versus the whole portfolio of CLO. For all I know it is 50 million out of 500 million.
Like Mr Elino the CFO says this last report in the transcript.
“Additionally, we did see a slight net increase in delinquencies in the third quarter of approximately $28 million. We experienced $98 million of new delinquent loans and resolved a $70 million delinquent loan from last quarter through a successful restructuring.”
So as you can see they are dealing with the issue. Resolving a 70 million loan appears to be a big deal? So how much in loans are outstanding to determine how big an issue this is? So now I would have to dig deeper and deeper…
FC,
If you’d like to read the article in full, try this link.
https://archive.is/8QSIA
Thank you for the link. I feel like I have heard of that website but fail every single time to use it.
Based on the article there is obvious strain for Arbor and the people who borrowed money that now floats. One thing I did not follow properly in the article were these two sentences.
“Most borrowers who were late on January payments eventually paid, an Arbor spokesman said, and he said 5.8% of Arbor’s securitized debt payments are still not current on January payments. ”
“The spokesman said the share of Arbor loans that were delinquent on January payments and delinquent for 30 days or longer was 4.6% as of Feb. 13. ”
Did the author speak to the “spokesman” on different days? Are we talking about different things? How does 5.8% of securitized debt not current in Jan turn into loans totaling 4.6% that are delinquent on Jan and delinquent 30 days or longer? I would have thought the second statement would be higher percentage wise.
So things are improving then in a matter of a few short paragraphs? Just slightly confusing at first glance. One can still see the stress though compared to a year ago.
There are two discrete data points, loans that are late making payment in January (~25% of securitized debt) and loans that are 30 days late or more (~9% of debt). Of the first group, most eventually paid but there is still 5.8% outstanding.
This indicates that the delinquency rate for securitzed debt is increasing rapidly if the 5.8% of newly delinquent debt gets added to the 9% of securitized debt already outstanding…especially when compared to the 30+ days of delinquent debt for January 2023 which was reported to be 0.4%.
The rest of the article outlines some of the reasons this might be happening, but the outlook for Arbor does not look sunny.
Citadel, restructuring doesn’t sound good either. That is kinda kicking the can down the road. Riley for example and I think I remember 15 years ago other companies like Apollo, and was it Ellington doing the same with used car dealerships back when. Failure rate was high on restructured loans.
CW:
ABR up nearly 6% today, as the market likes its EPS report (with a 34% short interest we are likely seeing a squeeze today).
Remarkably, at $13.90/share I have it trading at a 4% premium to tangible book value now, while a few of the other quality commercial mortgage REITs (BXMT, KREF) trade at 20%+ discounts. Paying a premium to book value in this market today for any commercial mortgage REIT seems foolhardy to say the least.
For a $12+B loan portfolio, they don’t appear to be taking many CECLs. Only $17M in the 4th quarter? They did see a 75% rise in non-performing loans to $263M since 9/30/23.
“During the fourth quarter of 2023, the Company recorded a $17.3 million provision for loan losses associated with CECL, which was net of $4.8 million of loan loss recoveries.
At December 31, 2023, the Company’s total allowance for loan losses was $195.7 million. The Company had sixteen non-performing loans with a carrying value of $262.7 million, before related loan loss reserves of $27.1 million, compared to twelve loans with a carrying value of $150.5 million, before loan loss reserves of $12.6 million at September 30, 2023.”
I saw that the REIT analyst at Hedgeye put a SHORT on ABR yesterday….whoops. But he had done real well with his short on MPW.
I don’t own any of the ABR preferreds but they all look “money-good” to me.
Myrmikan Research
https://www.myrmikan.com/pub/Myrmikan_Research_2024_02_15.pdf
Ships are my arrows, the sea my bow, the world my target.
Nations do not exist in isolation. Peoples have always roamed the globe in search of different opportunities. Nations principally trade to expand their consumption possibilities. In a world where we produce to consume, receiving goods and services is better in material terms than sending them elsewhere.
By war a nation may take what they want or need. If renewable like fruit on a tree they cultivate the tree, if it’s finite they consume and take All that is there and without worry over the destruction or misery that is caused.
AB; thank you as always, for your succinct insights. The article is spot on.
Question on ZIONL a floater ; big current yield of 9.4% on high quality issue
can be called since float 9/15/23 ; question is ;will it be called on next div date ;end of Feb; its trading with accrued dividend of 50 cents; does anyone have any insight about the near call possibility?
They have another more expensive issue, “O” is Three Month Term SOFR plus 0.26161% plus 4.24%. Currently a healthy 9.73% yield.
“L” is 3.89% over SOFR. Difference is “L” is subordinated note with a stated maturity date in 2028.
So no information to go on, but with banks now on the edge with current economy and that these other more expensive issues remain outstanding, my bet would be on the line that it’s not called. A new issue can be expensive and not sure what rate they’d have to pay in today’s market with a BB+ rating.
…banks always have the option of suspending the dividend for some period
of time. I own a some Synovous fixed to floating issues which are pretty much in the same category. I’m curious why they don’t call some of these
issues.
Guy; thanks for your thoughtful input; I’m on the ZIONO as well ; both are now trading close to 25 on a stripped price; (within 10 cents); this looks to me to be a win-no lose situation ; its about a wash if they call them;
having just sold all BANCpF for a large profit, I have been reinvesting in ZIONL ;
Does anyone have an opinion on the CLO market? Specifically as it related to the holdings in JAAA and JBBB?
Rocky Mountain,
I’m happily invested in two baby bonds (EICA and EICB) from a closed end fund (CEF) that focuses in on the similar space as JBBB. The bonds have medium duration and when the price dips have a YTM of ~8%.
I like having a focus on the debt vs the equity and I like the CEF coverage requirements.
Just an FYI. Both EICA and EICB are preferred shares, not debt.
e.g. here is the offering document for one of them.
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001754836/000110465923083146/tm2319755d8_424b2.htm
RMH,
I own both those funds. Have an equal weighting in both but some people I’ve read have mentioned the JBBB fund, although lower in quality holdings, provides a worthwhile bump in yield. It would be pretty rare for BBB rated CLO entity to melt down. Having said that, I’d be lying if I said I understood it all.
Thanks for the comments, Greg and PP. I hate investing in things that are pretty nebulous and hard to research. I plan to monitor JAAA/JBBB very closely for any issues.
This SA article provides more info on EICA and EICB
I own both
https://seekingalpha.com/article/4667650-eica-great-deal-to-like-about-this-8-percent-two-year-baby-bond
RMH,
I hold JAAA, JBBB and CLOZ. These are very safe from a credit perspective. I have read that there has never been a default in an AAA CLO. Also, BBB is like .02 percent default rate. I think most of the loans are floating so the dividends will drop with rates. There are a few good articles on SA regarding these funds. They appear to be the safest higher yield instruments around, about equal to investment grade bonds with better rates. Time will tell. Good luck!
Anybody else out there who hold LNC-D getting an itchy trigger finger? I bought a few hundred shares back in May 2023 a little below par and it is currently $28.25!!! . If I sold my capital gain is like over six times the quarterly divy! I don’t usually flip things much like some folks here, but this is just a little tempting. Only issue LNC-D is still returning right at 8% at this elevated price and that means I have to find another place to put the coins returning 8%.
dj – I am an unrepentant flipper. For most issues, my rule of thumb is that if something runs up to the point that the market will pay me more than a year’s worth of divis for my shares, it can have them.
Esp. true with something that has run up $4 in less than a year (and dropped $4 the six months before that) – but I don’t own LNC-D and you (a) shouldn’t take advice from me (its not even worth the price you are paying for it), and (b) you should do what best matches your strategy.
Dj – my first thought was the LNC instl floater, mentioned a few times on this board, including Joel.
CUSIP 534187BN8
https://innovativeincomeinvestor.com/bond-discussion/
Private:
Those are pretty good rules to follow, especially the one years worth of dividends. I am still holding my PBI-B shares, up a little over $3.00 a share from my buy price, almost 2 years of dividends and I am in the “deer in the headlights” mode.
You are a braver man than I, Bill.
If rates ever go down I can picture LNC-D above 30. I will hold.
Yikes, even thinking of the YTC at $30 is scary. 2027 will be here soon.
Signed,
A fellow unrepentant flipper
Maine/fc/dj/Private,
Ran the numbers through the YTM calculator. Running ~5.441% YTM if called on time. I have it too, bought during the 2023 banking crisis. Kinda feeling like that YTM isn’t good enough right now for BBB-. Not knowing, of course, whether or not it would be called on time.
Thinking about selling after a very nice cap gain.
Not sure my YTM is correct, wondering if someone could check it
At $28.06, I get 5.41%
Yup, the YTC is tough for these names trading over par with a couple years left.
For instance, the YTC is horrible for CSWCZ when it approaches $26, which it often does.
I don’t blame those that are buy and hold, I just rather squeeze out a few percentage points each year by trading around.
If there is something lined up to buy then yes am in agreement. Not typically a trader myself, but, I will move around the chess board pieces every so often. Sold LNC-D and purchased SR-A (thanks Tim for alerting us!!). Got an upgrade in quality and with YTM over 7% with SR-A. Took a little bit of a coupon hit there but I think a decent move all things considered. If 10yr heads to 5% then I guess it all goes down some.
Pig; i’m in at 25.08 and i’m still with it; went ex today; the current yield is hard to beat elswhere at the moment,
I know a number of folks here own ECCF and some of the securities in this article – FYI
https://seekingalpha.com/article/4669725-buy-ofs-capital-term-preferred-occin-sell-eagle-point-eccf-term-preferred
He wants a higher yield but didn’t say the company was at risk. So I’d have no problem holding for 7.5%. He compares it to lower yield issues priced so low they have a higher YTM. That seems to be a frequent occurence nothing unusual here. The higher YTM may be the better long term hold but investors tend to underrate that factor when it’s several years out.
Z thanks for posting. I always like reading PST but I don’t always want to be flipping my holdings although I try to spread the risk out. I like reading the comments section in the articles. Just like Martin’s here.
Martin, I had time to read the article and ran it through Quantum and after comparing OCCI market cap to ECC market cap of almost 5x I feel better with the preferred of ECC just my personal preference.
For long holds, CY at time of purchase outweighs any bonus cap gain (or loss) years later when inflation has eaten up the value. For short holds, say 2 years or less, YTM becomes more interesting.
10yr ~ 4.287%, testing 4.3%.
50bp increase since December 26.
News about NYCB in the WSJ:
Tougher Rent Laws Are Behind Trouble at NYCB
Values drop at rent-stabilized apartment buildings, squeezing lender
free link to story:
https://www.wsj.com/real-estate/commercial/tougher-rent-laws-are-behind-trouble-at-nycb-cc11f56a?st=ct3emy0a446d8jf&reflink=desktopwebshare_permalink
Negative and positive reports. A quote from NYC.GOV: Last week, the triennial New York City Housing & Vacancy Survey (HVS) for 2023 was released, detailing the tightest housing market in the city in over 50 years. The rental vacancy rate fell to a multi-decade low of 1.4%, down dramatically from 4.5% in (pandemic) 2021 and 3.63% in (pre-pandemic) 2017.
Also prices remain up 2.3% year-over-year.
Is this new or old info concerning CTVA?
For Immediate Release:
Thursday, February 8, 2024
Contact:
Nazneen Ahmed (919) 716-0060
(RALEIGH) Attorney General Josh Stein today applauded the North Carolina Business Court for a decision that will help the North Carolina Department of Justice in its ongoing fight to protect North Carolinians’ access to clean water. The ruling states that if the court finds “old” DuPont liable for PFAS contamination in North Carolina, then in addition to Chemours, its other new offshoot companies, New DuPont and Corteva, are also on the hook for damages.
“Companies cannot engage in corporate shell games to avoid liability for the messes they make,” said Attorney General Josh Stein. “I’m pleased that this ruling provides that Chemours, DuPont, and its related companies cannot avoid responsibility by engaging in corporate restructuring schemes. Our fight for clean drinking water continues.”
The North Carolina Business Court determined that if old DuPont is found liable for contaminating North Carolina’s natural resources with “forever” PFAS chemicals, then New DuPont and Corteva can also be held financially responsible for the damage.
Attorney General Stein sued DuPont, Chemours, and other related companies in October 2020 to hold them accountable for how their manufacture, use, and disposal of PFAS have polluted North Carolina’s drinking water and other natural resources.
Corteva faces a lot of headwinds.
(Reuters) – Syngenta and Corteva (CTVA.N) must face a lawsuit from the U.S. Federal Trade Commission and a bipartisan group of states accusing the pesticide manufacturers of unlawful efforts to curb competition from generic rivals, a federal judge has ruled.
In addition to the FTC lawsuit, Corteva is also making hundreds of millions in payouts to resolve all PFAS-related drinking water claims by public water systems that serve the vast majority of the United States population.