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.
An interesting excerpt from John Mauldin’s latest newsletter discussing the recent rise in long-end treasury yields:
Mortgage rates generally take their cue from the 10-year Treasury yield, and indeed they rose, too. My friend Barry Habib of MBS Highway noted this isn’t unusual (even if it seems to be a surprise to some business media). Here’s Barry:
“This is not an unusual phenomenon—We have seen this happen in almost every rate cutting cycle except for 2019, and a lot of the reason why is investor psychology. Investors believe we have a greater chance of avoiding recession once the Fed starts cutting, which causes them to invest in the stock market at the expense of bonds. And the Fed cutting causes some to fear inflation rising once again, which causes bonds to temporarily sell off.
“But the Fed is cutting for a reason, and it’s because they are seeing the economy slow. And that helps the bond market and inflation come down. In each of the last instances where yields initially rose, they eventually fell much lower and we don’t believe this time will be any different.”
That’s an interesting take. I wonder how many times the fed started cuts with inflation still well above target. And not just a cut, but a 50bps cut.
On the other hand, I charted PFF against TLT over the last 30 days. There’s been a pretty large divergence. I raised a little cash recently.
To expand a little further, I don’t know anything about the future direction of rates…heck, I don’t even know which pieces of economic data being widely shared are real.
But the divergence between TLT and PFF was concerning for someone invested in fixed income. I think basic principles of risk management warranted taking some off the table.
good comment.. pff/tlt pair has gone from 2 sigma cheap in september to near fair value now (3yr horizon).. PFF has outperformed since the march 2020 all time low and viewing the pair from horizon going back to march 2007 us trading near 2 sigma rich
Today we have TLT down while PFF is up. Weird.
I’m not good at predicting the future. I’m much better at reacting to the present. So I try to stay nimble and respond accordingly.
Using past market behavior as a guide to the post-Covid era has been unreliable. Maybe the historical patterns do replay given enough time. The deviations provide food for thought.
I’m not expecting long yields to fall back much any time soon. Will they rise more? Dunno, but if they do, market participants will have to make unexpected adjustments, and that’s when opportunities pop up.
My secret wish is that the various entities busy calling my bonds come to regret it when yields rise and they can’t refinance on the cheap. Unlikely, but makes me smile.
Good morning folks. Today I have a question:
Are we aware of any preferred securities or junior debt that becomes senior debt in the event of a company bankruptcy?
I know this sounds odd, but recall the CIT bankruptcy. CIT had a preferred that rallied from 10 cts/$ to 60 cts because it became senior in a bankruptcy.
Now I reminisce:
Now that I’m thinking about that one, CIT was the largest non-bank lender and had been purchased by TYCO. It had 2 series of baby bonds that cratered when the “microsoft of the plastic hanger business” as the Koz put it , got into trouble. CIT was spun off with an IPO that raised it’s debt rating, and for a time those 2 babies traded at a 1-year YTC of 43% . They were eventually called.
Taking a look at the CIT history on Quantum -https://quantumonline.com/ParentCoSearch.cfm?tickersymbol=CIT*
Were those 43% YTC baby bonds the PINES (CIC & CIP), or the Lehman ABS Trust Certs (JZZ & XFK)?
PREJF—this is yielding higher than one might expect for a preferred rated Baa2/BBB. What’s the downside? That it may go dark? That the owner may strand it? Any ideas?
I suppose but I think Covea told someone here they intend to keep it PQ eligible. It was removed a few months back from preferred ETF’s but hasn’t fully recovered after going pink.
By “strand” it, what do you mean…like calve it off into a sub that has no revenue?
Made a nice pile trading the thing awhile back and am long a substantial amount, I suppose too much, even if only because it’s a financial and they all have “jump to default” risk. It’s one of 2 preferreds I still have.
This is what I got from IR on 8/5/24 about PREJF when I asked about plans for OTC listing:
PartnerRe plans to continue to meet the OTC’s “Pink Limited” requirements.
“Pink Limited” shares can also continue to be proprietary quote eligible (PQE) and Piggyback Qualified – Catch All.
Best regards
Stephen Boylan
Group Treasurer
Direct +33 1 44 01 81 10
Partner Reinsurance Europe SE, Succursale Française, 32 rue Guersant, 75017 Paris, France
http://www.partnerre.com | Twitter | Linkedin
FYI I just re-asked but I know it was reported here that the company expects it to remain PQE via the Piggyback Exemption
https://www.otcmarkets.com/files/Quote%20Eligibility%20Chart.pdf
Below is an excerpt from the latest annual statement from PartnerRe. PartnerRe mentions making quarterly dividend payments on the common shares which are now owned by Covéa Coopérations (parent company). So while the preferred shares are non-cumulative, PartnerRe would no longer be able to pay any common dividends in any quarter the preferred dividends were not paid, right?
“Dividend payments on the Series J Preferred Shares are non-cumulative
and the shares will remain outstanding into perpetuity unless called by the Company, which is first permissible, without regulatory approval on March 15, 2026. The Company expects to pay dividends on these preferred shares of approximately $10 million per annum in the period during which they remain outstanding.
The Company’s dividend policy is to declare and pay a dividend on its common shares at consistent levels each quarter. The annual interest and common and preferred share dividend obligations are expected to be funded using net cash flows from operating activities.”
https://www.partnerre.com/wp-content/uploads/2024/03/2023-SEC-Form-20F-pdf.pdf (page 55)
Dick – I do not follow this situation so I’m far from expert but as I read your premise, I was supecting it could be inaccurate… Did you read p 19? There it says, “On December 16, 2021, Exor announced that it had signed a definitive agreement with Covéa Coopérations, pursuant to which
Covéa Coopérations agreed to purchase all of PartnerRe Ltd.’s common shares held by Exor. Preferred shares issued by PartnerRe
Ltd. were not included in the transaction. On July 12, 2022, Covéa Coopérations completed the acquisition of PartnerRe Ltd. from
Exor. The Company’s preferred shares continue to be traded on the New York Stock Exchange NYSE.”
What does that say to you? To me it implies that since the preferreds were not part of the deal then should payments cease on the preferreds that would most likely not have any impact on their ability to pay dividends on the Covea common. I’m not pontificating that this interpretation is correct, only that it seems likely to me…. You too?? BTW, this statement is repeated elsewhere in the document as well…..
I think PartnerRe has been paying quarterly dividends on its common stock to its parent company Covea. I don’t see how PartnerRe could pay a common stock dividend in any quarter without paying the preferred dividend. Am I missing something here?
If you think about the Ameren preferreds, this would be like Ameren paying a common stock dividend without Ameren Illinois paying the preferred shareholders. The PartnerRe preferred dividends are not cumulative of course so that aspect of obviously different. But I believe this is another subsidiary issued preferred situation like the illiquid utilities or SLMNP. Knowing the common dividends to the new parent company would get cut off if PREJF stopped paying helped give me some additional comfort in owning.
This is not a huge position for me but I own it and plan to continue to hold as it seems underpriced. I haven’t researched it as deeply as I might have for larger sized positions so let me know if I’m missing anything.
You may not have researched it as deeply as you might but I readily admit I haven’t researched it all other than to read thru the doc you provided and did a Control F search for “covea.” I would wonder first off if the preferred didn’t go with the deal, then what’s truly behind it now and what’s not? There’s a major difference between this one and SLMNP. A Schulman has been absorbed into LYB and no longer exists…..SLMNP for all practical purposes has been assumed by LYB Partner Re does exist and it seems as though the preferred only exists with recourse to Partner Re. Do you know if Partner Re pays dividends to Covea? If so, maybe that’s where the added comfort might come for your ownership, but I just have this sneaking suspicion that it all adds up to Covea being willing to pay dividends whether or not PREJF itself pays divvies or not…. Also, I don’t know if this means anything or not, but keep in mind who issued the delisting press release on July 1.. It was Partner Re, not Covea.. https://www.partnerre.com/news/partnerre-ltd-announces-voluntary-delisting-of-preferred-shares-from-nyse/ .
For SLMNP, I think the entity still exists. See below:
“A. Schulman was renamed LyondellBasell
Advanced Polymers Inc. and became part of LYB’s Advanced Polymer Solutions segment.”
https://www.lyondellbasell.com/4aed47/globalassets/investors/stock-information/faq-for-aps-shareholders—conversion-process.pdf
For PartnerRe, they are paying common stock dividends as far as I could tell from the financial statements linked above. They mention that they pay quarterly.
Apologies, Dick… RE: SLMNP, I was going by memory where I felt certain I had it in my notes that at least one of the rating agencies made mention of A Schulman being considered as guaranteed now by LYB, but I cannot find that statement to back it up. I also thought the effect of its merger into the subsidiary of LYB and subsequent renaming of the sub to Advanced Polymer Solutions meant that separate financials for Schulman no longer existed since the division known as Advanced Polymer Solutions was not synonymous with what was A. Schulman. Even that remembrance might be wrong as p 75 of the most recent 10k, https://www.sec.gov/Archives/edgar/data/1489393/000148939324000012/lyb-20231231.htm#i5994131f12f14f9992c568de0bcb3be0_181I, says, “Our redeemable non-controlling interests relate to shares of cumulative perpetual special stock (“redeemable non-controlling interest stock”) issued by our consolidated subsidiary, formerly known as A. Schulman, Inc. (“A. Schulman”)… Redeemable non-controlling interest stock may be redeemed at any time at the discretion of the holders and is reported in the Consolidated Balance Sheets outside of permanent equity. Dividends on these shares are deducted from or added to the amount of Income (loss) attributable to the Company shareholders if and when declared by the Company.” So officially speaking, I most likely inflated in my own mind how strongly SLMNP is backed by LYB.
Back to Partner Re, I still wonder what it legally means from a preferred shareholder’s perspective of what’s truly behind it now that it was specifically excluded from the Covea transaction. You have to wonder why it was excluded by name.
2WR, thank you for this. I’ll look into it a little more and if I don’ t understand it and cannot get a clear read from the company, I’ll sell it.
After further reading , PRE “dividended up” to Covea in excess of 100 mill each of 2021 and 2022, and in excess of 200 mill in 2023. The dividend on this preferred is $9 mill per year.
The preferred dividend really is just an afterthought. Heck, the foreign currency translation adjustment on the balance sheet is more than the preferred dividend.
Delisting and de-registering makes sense.
2wr and Dick: No acquiring company in a merger would acquire the preferred shares of the target unless they legally were able to do so ( as in a call)
and desired to do so.
Covea could have tendered for the preferred. It chose to keep paying a rate under 5%.
It makes complete sense to acquire the common but not the preferred.
Partner RE still exists as an entity and could not dividend up to the parent…or pay a dividend on the class of common shares issued to executives, without paying on the preferred.
If you believe I’m wrong please let me know why. I’d love more info on the preferred that is referenced on this site that –was it Brookfield? –was able to stop paying. I’d like to read that document.
I cut my teeth trading M&A and did it for years. For awhile it was the wild west, but I don’t recall ever considering this issue with a preferred.
I’m no more concerned by that statement on page 19 than I am about any company deciding not to pay on preferred.
I will admit the company has not responded to my inquiry in 10 days.
Again, I’d love to see the terms of the deal that allowed a buyer to stop paying on preferred.
And I’d like to give you a “Like” but I can’t….. as no “Like” button counter allowed on your post.
@losingtrader, what do you mean by “Covea … chose to keep paying a rate under 5%.”
PREJF remains an obligation of PartnerRe, so it’s PartnerRe who continues to pay the 4.875% rate, correct?
I mean Covea could have tendered for the preferred when it bought the common. Since it owns 100% of PRE common, PRE is consolidated onto the balance sheet of Covea under IFRS (international financial reporting standards) . if they owned a smaller % of PRE it would still be consolidated onto Covea if over a certain fairly low percentage.
It’s LEGALLY separate, but PRE credit rating was improved in the acquisition under credit ratings agency ratings guidelines.
PRE even has some legally separate entities of its own, which get lower ratings, like a finance sub.
So, whether Covea or PRE tendered isn’t very relevant But I suppose since they are legally separate entities, now Covea would have PRE do the tender if it wanted to retire the preferred.
Covea is a mutual insurer -i.e. owned by the policyholders
Here is the contact info I have from the IR person for PREJF:
Stephen Boylan
Group Treasurer
Direct +33 1 44 01 81 10
stephen.boylan@partnerre.com
The ask on PREJF is $17.45 currently (6.98%). With the news on SJIJ, I wonder if the company will do a tender offer for this one at some point.
I believe its a little over 7 if you include the accrued dividend.
Interesting fact I didn’t know: 10+ year treasuries represent only 2% of the govt debt market.
52% is 1 year or less
21% floating rate notes
17 % 1-10 year notes
7% Tips
https://www.ishares.com/us/literature/product-brief/mechanics-of-tips-en-us-product-brief.pdf
I know we have kicked this can many times in the past, but with the “possibility” of lower interest rates, it does change things a bit. My question is, when do you sell an issue that has a substantial capital gain, say 15% or more ? In the past I sold if an issue had two years or more of dividends gain and it was a perpetual or at least 3 years from a possible call. Now with lower interest rates there exists the possibility of further capital gains and at the same time the possibility the whole gain could be wiped out in one day. Just curious what others do as it is harder to replace an issue with something equivalent.
That’s a tough one, Bill and I think others have posed similar questions. My response is always the same: there are many factors including tax consequences of any sale, do you need the money, what will you replace the investment with, what is your current allocation, what is your strategy, and what is the potential gain or loss of the investment. Each person and individual holding will have different answers.
For myself, I have a very conservative portfolio (at least I think so), with lots of MMFs and CDs, along with individual preferreds and a couple handfuls of income-oriented ETFs. So I’m just holding for the moment because of the tax consequences of any sale and the fact that I don’t know what I’d do with the proceeds.
It sounds like we have similar portfolios. All my investments are within my IRA
( I am 75) so the only tax paid is on money withdrawn and I am subject to the yearly RMD whether I need the money or not 🙁 You are exactly right when it comes to what to replace it with, luckily the MM is still a decent parking place.
In an IRA it doesn’t matter what I paid for it, I sell based on what it’s worth today and if I can buy something better with the same money. If both issues went down I don’t consider it a losing swap. In a taxable account the tax liability is a factor too, in addition to the same idea.
CGBD News: Carlyle Secured Lending, Inc. Prices Public Offering of $300 Million 6.750% Unsecured Notes Due 2030 – FYI
CGBD BDC
Z
Holding a lot of CCIA, maybe a bit more than I should, otherwise I would a bit of this. Thanks !
Please recall that CCIA is issued by Carlyle Credit Income Fund NOT Carlyle Secured Lending. The comparable issue would be CGBDL.
Are they not both part of the Carlyle Group ?
Yes, they are both managed by Carlyle Global Credit Investment Management, but Carlyle Credit Income Fund and Carlyle Secured Lending are separate legal entities. Carlyle Credit is a closed-end fund investing in CLO’s while Carlyle Secured is a BDC providing specialty finance to middle market companies. Therefore, they have different credit profiles for the purposes of rating their respective debt offerings.
Carlyle term sheet
https://www.sec.gov/Archives/edgar/data/1544206/000119312524235989/d840505dfwp.htm
Schwab sends out new issue bond alerts in the morning, and then some minutes or hours later, sends a message saying the offering is closed. You have to speak to a trader to learn the terms and place an order with very little time to consider. I’ve never done that, partly because it seems incredibly stupid not to receive the terms in the email. However, at the time of an alert, the terms are probably not public.
In the case of the new Carlyle bond, the alert was yesterday, Oct 10, and the term sheet was posted on Edgar today, Oct 11. In order to purchase the bond, I will likely have to wait until the Oct 18 settlement and buy on the secondary market. I can always hope it trades below par. If I had placed an order yesterday, I might have been able to buy at the discounted price in the term sheet.
Is this just the way things work?
r2s—I agree that it’s almost impossible to make an informed decision without knowing the terms. It would help if the alerts at least provided the credit rating of previous issues by the same company. I’ve decided to just ignore the bond alerts and wait to see how the issues trade in the secondary market.
Do you have to sign up for these alerts? I don’t think I get them…Then again, I don’t pay close attention to Schwab fixed income.
I’m also interested in getting fixed income alerts from Schwab. I’ve had an account with them for years but haven’t heard of this before. TIA!
2wr—you need to call the bond desk at Schwab and sign up for alerts
Looking for love in all the wrong places. . . Some III’ers limit their holdings of prefs/babys to investment grade only. The baby/term study I posted yesterday had an interesting sidebar. All and I mean ALL of the IG rated babys/terms have long dated maturities, as opposed to the junk/unrated ones. For example, if you want an issue that matures before 1/1/2028, you have 61 junk/unrateds to choose from compared to ONE IG rated. That being the KTN trust which matures on 1/1/27. Stated differently, it is impossible to build a short to medium term portfolio of IG rated issues. So pick your poison:
A) You prioritize short to medium term and have to accept junk/unrated issues
B) You prioritize IG rated issues and have to accept a Titanic full of duration risk
C) You want both and have to look in the $1k face corporate bond offerings
This showed up in an unexpected way. When you combine both junk/unrated with IG and plot their yield to maturities, the best fit line shows the longer the maturity, the lower the YTM. Exactly the opposite and what you would expect, which is why you have to analyze them separately.
Tex-
I’ve started working my way through the less than 2 years to maturity list with greater than 7% YTM and acceptable risk. Should a recession or market downturn butt in, there’s the hope that the approaching maturity will play out as planned.
If you expand that view by 5 months to May 2028, you’ll find a few more.
Tex—where can one find a list of recently issued $1000 corporate and agency bonds? Thanks.
If you have a Fidelity account, if you go to News&Research/ Fixed Income, Bonds and Cds/New Issues, you can see new issues in the categories of Treasuries, CDs, Agency/GSE, Corporates, and Municipal….. It doesn’t go back very far in history to, for example, be able to see what came last month, but if you check in regularly you’ll get the feel for what’s out there…. It also doesn’t include non rated or junk bonds…… There is a way to search for those via another link, but as I remember it doesn’t allow a search for most recent in that category
The chart of TLT (20T) sure looks ugly
Westie 5yr chart make me wonder why anyone would be interested. Think it will hit the Oct. 2023 low?
Reaching Oct 23 low of 83 is a stretch
Wouldn’t bet against hitting Apr 24 low of 87
I don’t understand why a lot of the preferreds are holding up so well despite a 60+bps increase in the 10 year from it’s intraday low just a few weeks back.
Are we just assuming the prospect of lower short rates are forcing people further out on the curve.
I’m loaded down with enough lon maturities of tax exempts , so I just dumped all my preferreds. That means we are at the peak and rates are about to fall.
I’ve got to stop betting direction
With CDs and MMFs in the 4-4.6% range I’m guessing 6%-plus preferreds are still attractive?
Rocky, What are you going to do if you want the income? LT may be retired but he is a trader at heart and a good one I bet. Continuing to grow his holdings and sweep profits off the table into the pot he draws from. LT wouldn’t surprise me if he’s good at Texas Holdem.
Hi Charles. I was just postulating that some preferreds are holding up because of the lower rates on CDs and MMFs. I’m not selling any preferreds because I love the income, although I don’t need it at the moment. But that’s just the way I handle things.
It’s the risk/reward. Rocky, I thought I could hold them all, and I am holding onto 2: SLMNP and PREJF. In fact, I may buy more of those. I look at SLMNP as being like commercial paper since I can put it. Lyondell’s short term rating is F2.
I will bet you I top-ticked the 10 year with my post. I am very much a trader but I do have very large A to AAA muni holdings. I’m not at all as efficient as I could be but the trader in me always wants a lot of liquidity
losingtrader I got a chuckle out of that. I hadn’t been interested in muni because the yields seem low but I know they are a lot safer from a risk perspective.
Charles, I have mostly AA/AAA housing bonds and they can all be called. Yields from a horrid 2.65 up to as much as 5.50 tax free.
The tax equivalent on a 4.50 tax free is pretty juicy . especially when one considers the relatively low risk of default. The housing authorities are able to issue debt backed by GNMA’s , Fannie and Freddie MBS.
I haven’t looked in a couple of years, but Muni’s in CA are not so nice (Charles and I live in the people’s republic of Cali). Yields are most of a point lower, and we have had a number of bankruptcies.
That said, qualified divi’s are fully taxed in the republic, so that isn’t a tax shield either.
No hurricanes here, but we have had about half a dozen earthquakes around magnitude 4+ in the past year within about 20 miles of my house.
That’s how you can spot newbies to the area. Ground starts shaking they duck for cover. A couple of years after the big quake in ’89, I was in a negotiation with about 8 people (from NY). A mag. 4 earthquake hit centered about 5 miles away. I looked around the room and I seemed to be instantly alone – everyone else was under the conference table.
The geysers Geothermal field is always going off. Unless it’s a 5.0 I don’t even notice.
LT, waiting t osee how our taxes look this year with my wife retired and me only working for 2/3rd’s of the year and semi retired. Soon to retire completely. So hope next year the taxes will be less.
Nothing wrong with preserving capital. As many others have discussed, if I sell something it causes two problems: more taxes and a decision on what to do with the proceeds. So that’s kind of why I’m trying to hold my preferreds.
i don’t have a bid /ask on that at schwab;
is it still trading ?
If you’re talking about SLMNP it’s Expert market only.. Schwab won’t allow but some other brokers such as Fido will
LT
PREJF is an interesting choice.
I’m seeing that PartnerRe was acquired by a French insurance company (with a good credit rating) and that PREJF is a non-cumulative perpetual that pays QDI of ~7%.
I won’t get out of bed for 4%. Preferreds pay more some pay qualified dividends and best of all there are trading opportunities. Only reason to go cheap is default risk which doesn’t seem to be high for issues in the 6% range.
What is the point of looking at the TLT chart? How is it going to help you forecast future interest rates?
Buying TLT is a bet that sometime during your desired holding period, LT interest rates will be lower than they are now. In the meantime you get paid a 100% safe, tax advantaged 4% or so.
Gee, I’d like to give you a “Like,” David but here’s an example where the “Like” button shows “(PRO tariff plan allows to show maximum 25 button(s) per page. Upgrade your website plan on LikeBtn.com. To remove such notices uncheck Show Info Notices chekbox on plugin Settings tab.)”, so giving one is meaningless… Hello, Tim? Are you there? A simple Yes or No will do – is the “Like” button going to remain the way it is now or will it ever revert to its previous unlimited status instead of being limited to a maximum of 25 buttons per page?”
Blackstone Secured Lending Fund Prices Public Offering of $400.0 million 5.350% Unsecured Notes due 2028 – FYI
BXSL BDC
Baby/Term survey for defaults. My database has 170 preferreds/babys/trusts that are junk rated or unrated by either Moody’s and/or S&P. Many of these issues are discussed here on III as if they are “money good”, i.e. have a low probability of defaulting. We can stipulate that a high percentage will NOT default, but some likely will. I decided to take a look at how the market perceives the default risk, strictly based on current price, yield to maturity (YTM) and mature date. This is far short of a detailed default probability calculation where you assign a probability for each and every interest payment and both a probability and recovery amount in BK for the principal. (1) That is how Oaktree and Elliott for example build their models. Easy to do for a few securities but a little burdensome for 170. I used a mechanical calculation for YTM which is not precise, particularly for very near and very far maturities. I calculated the “correct” YTM for each date and “Chauvenet” the outliers. For example, what is the “correct” YTM at a given date when one issue is 5.5% and another issue is 50%? So, calculating the “correct” YTM is also inexact, but it is hopefully reasonable. Then you subtract the correct YTM from the actual for each security. If the YTM for XYZ is 9% when the correct YTM is 5.0%, you have a positive delta of 4.0%. I have arbitrarily labeled the 29 issues with a delta of >=3.0 as “Bankruptcy is imminent.” The 8 with deltas in the 1.5% to 2.99% are labeled “Bankruptcy is possible.”
There are two ways to consider this list. If you own an issue, you should re-assure yourself why you think it will be money good and pay off on time in full. If you do NOT own an issue and can convince yourself that it is money good, it will have a very high total return. And obviously, you must double check my numbers PLUS do a more precise calculation of YTM. For the sake of brevity, I am only listing the two troubled classes, but have the data for all baby’s/terms/trusts included investment graded ones. I excluded both convertibles issues plus ones that are NOT currently paying out.
Issues are sorted by maturity date in a CSV format:
Ticker, type, Moody’s, Mature date, coupon yield, coupon type, YTM, Yield delta, comment
MDRRP,Term,NR,NR,2/19/25,8%,Fixed,11.81%,5.6%,BK imminent
RILYM,Baby,NR,NR,2/28/25,6.38%,Fixed,67.56%,61.36%,BK imminent
SCCC,Baby,NR,NR,9/30/25,7.75%,Fixed,8.18%,1.56%,BK possible
BWSN,Baby,NR,NR,2/28/26,8.09%,Fixed,9.96%,3.1%,BK imminent
RILYK,Baby,NR,NR,3/31/26,5.5%,Fixed,38.4%,31.54%,BK imminent
TFSA,Baby,NR,NR,3/31/26,7%,Fixed,10%,3.35%,BK imminent
TPTA,Baby,NR,NR,6/30/26,6%,Fixed,25.33%,18.27%,BK imminent
CHRB,Baby,NR,NR,8/31/26,8.5%,Fixed,24.81%,17.46%,BK imminent
RILYN,Baby,NR,NR,9/30/26,6.52%,Fixed,52.71%,45.44%,BK imminent
GREEL,Baby,NR,NR,10/31/26,8.5%,Fixed,58.73%,50.85%,BK imminent
ARBKL,Baby,NR,NR,11/30/26,8.75%,Fixed,53.1%,45.67%,BK imminent
FOSLL,Baby,NR,CCC,11/30/26,7%,Fixed,35.87%,28.87%,BK imminent
SCCD,Baby,NR,NR,11/30/26,6%,Fixed,10.69%,3.93%,BK imminent
BWNB,Baby,NR,NR,12/31/26,6.5%,Fixed,13.46%,6.71%,BK imminent
RILYG,Baby,NR,NR,12/31/26,5%,Fixed,48.03%,40.35%,BK imminent
SCCE,Baby,NR,NR,3/30/27,6%,Fixed,11%,3.19%,BK imminent
GEGGL,Baby,NR,NR,6/30/27,7.25%,Fixed,9.92%,2.4%,BK possible
SCCF,Baby,NR,NR,6/30/27,7.13%,Fixed,11.28%,3.76%,BK imminent
SCCG,Baby,NR,NR,9/30/27,8%,Fixed,10.78%,3.33%,BK imminent
LTSL,Baby,NR,NR,11/30/27,6.56%,Fixed,14.95%,7.29%,BK imminent
HROWM,Baby,NR,NR,12/31/27,11.88%,Fixed,9.17%,1.51%,BK possible
RILYT,Baby,NR,NR,1/31/28,6%,Fixed,41.59%,34.06%,BK imminent
LTSF,Baby,NR,NR,5/31/28,7.04%,Fixed,14.62%,6.98%,BK imminent
RILYZ,Baby,NR,NR,8/31/28,5.25%,Fixed,36.86%,29.36%,BK imminent
CNFRZ,Baby,NR,NR,9/30/28,9.75%,Fixed,15.04%,7.68%,BK imminent
LTSK,Baby,NR,NR,9/30/28,7.25%,Fixed,14.2%,6.52%,BK imminent
LTSH,Baby,NR,NR,6/30/29,7.74%,Fixed,13.83%,5.2%,BK imminent
QRTEP,Term,NR,NR,3/15/31,8%,Fixed,24.06%,16.75%,BK imminent
MHNC,Baby,NR,NR,12/1/43,7.76%,Fixed,10.93%,2.27%,BK possible
MHLA,Baby,NR,NR,6/14/46,6.64%,Fixed,9.96%,2.75%,BK possible
AIRTP,Trust,NR,NR,6/7/49,8%,Fixed,10.87%,4.19%,BK imminent
OPINL,Baby,Caa1,CCC-,6/23/50,6.38%,Fixed,10.2%,3.15%,BK imminent
AFFT,Baby,NR,NR,9/15/55,7.52%,Fixed,10.51%,1.84%,BK possible
CTDD,Baby,Caa3,B-,6/15/57,6.72%,Fixed,9.11%,2.77%,BK possible
QVCD,Baby,B2,B-,9/13/67,6.4%,Fixed,9.52%,3.27%,BK imminent
QVCC,Baby,B2,B-,11/26/68,6.24%,Fixed,9.36%,3.11%,BK imminent
AQNB,Baby,NR,BB+,7/1/79,9.06%,OneOff,8.91%,2.87%,BK possible
(1) The Grammer Police will love that sentence! Rest assured that my print publications go through a law school professor that teaches writing to judges. III posts do not rise to that level of editing.)
Interesting list-I don’t understand AQNB though-it’s trading over par since it floated, so I’m not seeing where the large delta comes from?
Irish
Had same question.
BB+ is way highest on Tex’s list
When you go to SA and to AQN site, you see a lot going on.
My guess is the reduction in common dividend is responsible for the delta.
Have a large position – worth watching but not bolting.
Tex – Outstanding post. But, I like to sleep well at night, so I’ll pass on all of them (although I am guilty of owning some of them in the past).
Tex, I really appreciate this list.
Tex, now the 64.00 question. I guess for your age and fiduciary responsibility you own none of these in any of your accounts or ones you manage correct?
Interesting list Tex. People should be also looking at the parent company to see how their financials are doing. HROW is still losing money for the last 2yrs but the losses are narrowing as cash flow and profits rise. The preferred are at a premium to par so are they worth holding or cash out and take the capital gain.
Osaic ? how is it actually doing since being taken private.
AQN is mixed results as they are bailing to right the ship and it still remains to be seen how they do. Quick skim of AQN they twice cut the dividend to now it’s 70% of income, but they still need to pay down 8 Billion of debt and is there any money left over for maintenance and Capex?
The rest I have no interest in.
Tex-
Sorry- I don’t understand YTM vs ‘correct’ YTM.
Also- before these payments are canceled, the common would need to be canceled, so- might that change the outcome or how immanent?
Is that Kelsey Grammer (Frasier) you are concerned about? ( vs grammar ) ;-))
Gary, the “correct” price for a given maturity date is an attempt to estimate what the median price for all unrated babys/terms would be. Pick a maturity date of 1/1/28 and let’s assume you have five different babys that mature on that date with the following yield to maturities:
A- 6.5% YTM, delta= -0.8%
B- 7.3% YTM, delta= 0.0%
C- 7.0% YTM, delta= -0.5%
D- 9.3% YTM, delta= +2.0%
E- 7.6% YTM, delta= +.3%
The median YTM for these 5 is 7.3%. Which give the corresponding deltas that are listed. In this case, issue D has a delta to the “correct” YTM of +2.0%, so it would be labelled as “Bankruptcy is imminent.”
Understand that the calculation for “correct” YTM is NOT perfect, but is arguably a reasonable approximation. Also understand that extreme YTM’s were removed from the calculation via the Chauvenet Criterion, which is a fancy way of saying we through out any data points we don’t like. That is a valid procedure for physics where you have hard laws. It is less valid for finance. In our case we had several RILY baby’s with ~ 50% YTM’s. I did not think it was reasonable to include those in the calculation of “correct” YTM, so they were thrown out.
“Grammer” passed the Microsoft Office spell check so it must be proper usage! Maybe Kelsey is better known than the Grammar Police. . .
“through out” – did you say that on purpose just to hear if the GP sirens would go off and you’d risk arrest???? LOL Thanks for the explanation of “correct yield.” I had no idea either…
Tex-
Thanks -I think that sort of gives me an inkling of an idea of a guess that I get it, I suppose. 😉
really- I do think I understand, just a bit arcane for me. I appreciate the explanation.
Someone asked “Osaic? How is it actually doing since being taken private?”
_____
Fitch Affirms Osaic at ‘B’; Outlook Stable
Tue 08 Oct, 2024 – 3:05 PM ET
https://www.fitchratings.com/research/non-bank-financial-institutions/fitch-affirms-osaic-at-b-outlook-stable-08-10-2024
Question on who gets partial dividends in a redemption.
I bought shares of FTAIP yesterday – AFTER the previous dividend’s 9/6/24 ex-date.
FTAIP gets redeemed on 10/30. It will pay out a partial dividend.
What is the record date for this partial dividend? Does that go to those who held the shares on 9/5/24 (day before the prior div ex-date)?
I’m afraid I may get just the $25 for each of my shares.
mbg…. I had a somewhat similar question a while ago as I also own FTAIP and I will offer my opinion based on what I learned from the answers to my question. I think you only have to own it before the redemption date to get the accrued dividend since the last pay date. In the case of FTAIP it amounts to about $.37 per share. So you should be good to get it. However you will only get the par price of $25 per share when it is redeemed. I suspect you paid about $25.29 for it, so you will only gain about $.07 per share……. I may get corrected by the better posters here as I am still learning! Myself, I am holding my shares to the redemption.
You should get the accrued from 9/15 until the day before payment… VERY roughly, using a 360 day year as per convention or .00573 cents per day, I think that’s around 25 cents…. just did this quickly while halfway out the door to Lowes so double check….. and yes, I think you only have to own the day before payment.
FTAIP should be trading with what’s called a “due bill” for the dividend. If you sold or shorted it you’d be obligated to pay the accrued dividend when it’s paid out. Similarly you are long the stock and a due bill.
dj, 2wr, and lt,
Thank you. I emailed IR. If they reply, I’ll post it.
dj, right on. I paid 25.29. I calculated a 6% YTC at that price, bot it and then saw that I neglected to adjust the accrual period to begin on the previous div’s pay date, not ex-date. Once I corrected that, I got YTC = only ~4.25%. I earn more sitting in SPAXX so if I can sell it at 25.30 or higher, I may do that. Plus I get the cash then, instead of on the 10/30 redemption date.
2wr, always appreciate your thoroughness and additional information. And very glad – if I recall accurately – that you made it out unscathed from the recent hurricane.
I double-checked. I got a different amount. Used the 9/13 3mSOFR rate + .26161% + the FTAIP spread. Divided by 360 and I got $0.00869 per day. X ~44 days = ~$0.382 total partial.
And Grammar Police (of which I think I’m probably a member), I deliberately spell “bought” as “bot”. I do that as shorthand. 🙂 When I see it written that way by others, I assume they use it as shorthand too, and they know the correct spelling.
See that, mbg? Never do anything quickly….. I didn’t factor in the F/f rate, just quickly looked at the coupon rate and did the calculation… Thanks for correcting……..lesson learned… again. I made dj happy… you made him happier….
BTW, your number gets pretty close to being equal to the $1,579,811 FTAI says they’ll be paying approximately… I think you’re higher by about $25k…..close enough for jazz…..
Let me clarify my comment. If you hold the stock the day at the close before it is redeemed , it will trade with a due bill on that day. Otherwise it trades flat.
It should work out that if I shorted into the redemption I’d be short a due bill and cash would come out of my account for that amount plus par value
Can anyone tell me, using finra, if it’s possible to search for new listings of $1,000 bond issues? If so, how precisely does one do it? Thanks.
TELZ being called 11/8/24 at $25.75
makes sense for WDS to call TELZ, even w premium, it is a small high interest (for them) note and cleans up off the bal sheet, these Aussie co’s stress ‘debt/gearing’ levels a lot in their reporting to shareholders, common through most of Asia I find- Singapore, HK, China.
unrelated/ been accumulating WTFCP 6.875% around par/$25 in the Roth, chance of call 7/1/25 but ok to hold if not for probable redemption at the 5yr anniversary point w the giant 5yt float rate on it. Slim Pickens out there. and..Watch out for bears! Bea https://www.youtube.com/watch?v=nDeUAJ-z3UY
Bea,
I also recently bought a significant position in WTFCP @ 24.98-it seems like it’s getting harder to find solid companies below par or with extended call dates. At least some good income until at least next summer.
Best,
Bill
Wsbcp very similar to wtfcp except it will probably be called 11-15-25 and ex-div is 11-1-24@
qxjm76940, yes I forgot about WesBanco 6.75% tied also to 5yr T reset, thanx. Put it on the hotlist. Strong regional bank of course WV but tentacles into SW PA etc. I used to wholesale to their advisors, appreciate the reminder. Bea
I should thank you. You have been an amazing resource for great investment ideas. cto-a bfs-d just to name a few. Thanks Bea.
I’ve owned WTFCP since July so own it a little lower….. Ah yes, Slim Pickens and his brothers, Finger, Easy, and Nose…… great band.. Didn’t you say you were a Cat Lady, Bea? lol
I too bot WTFCP in July also @ 24.72, and WSBCP 10/22 @ 24.95 –
clutching both close to my chest.
it seems that WDC is in a hurry to redeem!
If they had waited for 11/30/24 they would had to pay only $25.50.
If only I had been reading III on a more timely basis…. Score another one for III… I’ve paid up to buy the called note and wouldn’t have had to if I had acted on your post and the other one that provided the link as well…
If TELZ continues to be paid ( doesn’t go expert mkt) after the merger, it might chug along because of this clause:
“Tellurian Inc. 8.25% Senior Notes Due 2028 issued in $25 denominations, issued in $25 denominations, redeemable at the issuer’s option, after 11/30/2023 but prior to 11/30/2024 at $25.75 (103%) plus accrued and unpaid interest, after 11/30/2024 but prior to 11/30/2025 at $25.50 (102%) plus accrued and unpaid interest, after 11/30/2025 but prior to 11/30/2026 at $25.25 (101%) plus accrued and unpaid interest, after 11/30/2026 at $25.00 (100%) plus accrued and unpaid interest, and maturing 11/30/2028.”
Gary, thanx, This is good to know on TELZ, buyer Woodside (WDS) has its hands full now w the buy of Tellurian and a big ammonia plant, all their other capex for LNG etc in AUS. Not sure they would? redeem but they have a decent credit rating in the high B’s and could probably refi if needed. I have it on watch all of a sudden a junk bond comes with a major o/ng/lng co decent credit rating etc. Thanx. Bea
Bea-
I’m a little chagrined that I hadn’t noticed my own note on my spreadsheet !
There others in the same bonus boat that I am aware of ( but no guarantees on the bonuses) —
ATLCL (11/30/24) 2%, ’25: 1% // BWSN 1% B4 2/28/25 // LFMDP 1% B4 10/15/25 // QRTEP B4 9/26 & /27 4% & 2%- BUT THAT WON’T HAPPEN!
XOMAO -B4 4/15/25 2%, ’26 1% //XOMAP -Same for 12/15/24 & ’25
I’m sure there are others- would be good to know.
I don’t know about those tickers which I do not follow, sorry, Gary but I see WDS has closed on the Tellurian deal and now the debt is part of WDS as indicated in the footnote; again not sure if they will redeem or when in the scope of Woodside this issue is not much debt at all, maybe they pay off w cash flow or LOC as it might? be cheaper. Its already over par today at 25.45/sh close.
I follow a lot of AUS names this was in my list, not long WDS at this time. Bea Link: https://hotcopper.com.au/threads/ann-woodside-completes-acquisition-of-tellurian.8250309/
“Bloomberg relays today that 96% of S&P 500 utilities sector components change hands within 5% of their respective 52-week highs, a phenomenon seen less than 1% of the time going back to 1953 and last observed in 2016. That rate-sensitive cohort, which sports a 2.8% trailing 12-month dividend yield, logged a monster 18% rally over the three months through September.”–From Gran’t Observor email
LT, that is where I have had both the greatest capital gains and some of the best yields the past 2 yrs. I knew I couldn’t have my cake and eat it too. Still don’t see where selling to lock in the capital gains is going to get me if I can’t replace the yields I am getting with similar safe stocks. To get the same return on cost I would have to move farther out on the risk scale.
If the herd thinks it’s risk on time and then changes its mind they will back to wanting the ute’s so I will just sit tight.
Need to look at how many bucks you’re generating and, if you sell and lock in your capital gains, will whatever you choose to buy provide similar bucks. YOC can mislead.
Anyone interested in donating to help North Carolina, this has just been announced… 100% of proceeds to go to relief efforts https://www.concertforcarolina.com/
Brothers Brother Foundation based in Pittsburgh also donates 100% of all cash and donations from corps to needy areas and is preparing more caravans. You CAN direct 100% of your donation to the area you want to benefit, so say NC. You just tell them ‘Asheville NC’ for example and it goes there or they use their buying power and discounts for supplies to buy for the area you favor… We have favored them w our food bank for decades ourselves. Nothing worse than water damage, so sad. Bea https://brothersbrother.org/
We appreciate all donations to the Asheville / Western North Carolina area. We live in this area. A lot of people have been wiped out.
I found this site by posting a question on Seeking Alpha and it was answered by Gridbird who suggested I try this site. Best advice I ever got for free, but I feel abandoned without seeing anymore of his post. Please came back your posts and advice are missed.
Jabersein
Jaberstein–he could be here under a different ‘handle’.
I would recognize GB’s comments from a mile away regardless of what handle he used. No one has the same kind of expertise in the same kind of things.
Landlord—yes I feel the same way–it was distinctive. Doesn’t mean he isn’t lurking for now.
I have patience. Grid said he had made all his profit for the year and was just going to lock it in for the rest of the year. I hope to hear from him again in the new year. Of course he loves to bet on the sports so maybe he’s just switched interests.
we luv you Gridboo..knowing you are well from 2WR is enough for me, and of course lots of good posters here. Financial Social Media can be stressful but also rewarding even to lurk. I mean Tim’s old site Dividend Yield Hunter there was no chat but boy was it helpful to me!! Running your own money to me is miles ahead of anything an advisor can offer for most. Sorry to advisors, I built my wealth wholesaling to them!! lol.
A toast with Glacier Water to all! have a good week. Bea
Bea–some securities stick with a person ‘Glacier’
I ain’t gonna lie, part of me died when Glacier Water was called.
One of the better play’s Bea from the good ole days. I switched over to the local community market which is cheaper and is stainless steel. Had to switch to 3 gal. the 5’s for the wife were getting too much.
Have to admit, I had a second meeting with an advisor. It’s all about ETF’s these days. They seem to go with the general feeling that bond returns and treasuries are going up.
I realize I’m years late to the site and KTBA is no longer as good a play as it used to be, but seems like a great arb to short a T listed bond in the 5’s, buy KTBA at 7.5 pct pr better. and earn the spread.
IB is charging 1.24 to borrowTBB, and I’d bet it’s free if you ask Fidelity.
OFC the borrow cost could rise but if I open an account with Goldman I could lock up a borrow rate, earn almost full short credit on TBB (it would be about .25 off the full credit), then earn the spread between KTBA 7 % coupon and TBB 5.35%. Even doing this with IB I’d omly lose short credit on the first 100k. The question is how much can I safely short without a locked in borrow. Yes, it was an easy trade with KTBA yielding 10 awhile back
Regarding the reweighting in XLF, here it is in a bar chart.
https://ritholtz.com/wp-content/uploads/2024/12/nvidiaetf.png
Just curious, anyone know what happened to Gridbird? He used to post regularly but I don’t recall seeing anything posted by him in months. He was also active on a couple of other sites, but haven’t seen anything there either. Perhaps he’s just enjoying time on the golf course, but even then he’d take a few minutes to snag a trade to pay for wine and a steak dinner.
Fl_Guy;
I am glad you asked about Grid, I was wondering the same thing, hoping he is ok and doing well.
Gridbird was posting as recently as July elsewhere but I think he left here with a bad taste in his mouth when some jerk showed up and suggested it was illegal market manipulation to tell people about the value of MSEXP, one of the illiquid specialities he followed and which subsequently increased 6x when the true value of the ancient issue’s conversion terms became known.
SEC – please protect us from making 6x on otc stocks. Tell all the brokers to follow Vanguard’s lead and ban purchases of any otc issues lest we take such irresponsible risks.
SUCCESS -n. The one unpardonable sin against one’s fellows.
@xerty – I recall that exchange – and could understand if GB decided to just say ChuckIt and move on from here. But he just disappeared off the radar entirely, even on other sites. Hopefully he’s doing fine and just enjoying his freetime. Maybe MSEXP gave him the boost to his nest egg to find a private island 🙂 Take care.
FL – he IS doing fine and just enjoying his freetime.
Yes, I miss Gridbird’s posts a lot. He really knew the stuff he dealt with very well. Maybe he will eventually show up again.
dj–of course we don’t really know if he is here or not–could be here under a different ‘handle’.
I miss Gridbrid’s posts as well. I always found them insightful, useful, and objective. It’s understandable but a shame if that one post caused him to stop contributing to the site. I thank him for all the help he provided to me and I certainly wish him well.
2 WR ….. incredible postings on OUR Grid…
I put out a query on the site about a month back on his status.
Recently I have been looking at an old holding that You & Grid put me onto months ago ….EBBNF ect.
Somehow , Grid come on back.
Also, all of the current posters are a great source of ideas and insights.
That jerk was KaptainLou who said he was filing an SEC complaint against Grid. He was alleging the MSEXP trade was a pump and dump and saying no one would ever collect and it would all be clawed back if they did. This despite also saying he invested in it himself. Grid wasn’t even the one promoting the MSEXP trade and whoever was digging up the information was posting the source documents in real time. Lou knew all of this.
That sort of wholly irrational behavior makes me think the good Kaptain has other motives than what he pretends and was acting in bad faith. IMO he needs to be banned.
I agree. Threatening another user should be grounds for being banned from the site.
I have a feeling to catch a Gridbird you have to use the appropriate bait. Perhaps I will tell some esoteric story about a preferred share most have never heard of on the ill area and make a couple of blatant confidently incorrect mistakes so he feels annoyed and thus compelled to reply.
Yardeni finds more reasons to remain bullish.
https://www.linkedin.com/pulse/hard-feelings-edward-yardeni-yigne
Imagine this odd scenario: You’ve just inherited $2M cash. You invest half in a MMF paying 5% and the other half at par in a high-quality, IG, fixed preferred with a 6% coupon. Your YOC average is 5.5%. You then head off to Antarctica for a year of research.
You return to a financial crisis. FFR is 1%. The MMF is paying 1% as well, but your MtM value remains $1M. OTOH, the preferred is still paying you a 6% YOC, but the MtM value is $500K.
After mulling it over, you sell the MMF and buy $1M of the preferred, bringing your YOC to 9%. Then, it’s back to Antarctica for another year.
MMFs have the almost magical ability to preserve capital (ignoring inflation). They give a person access to a safe, market-rate, dividend-paying, overnight deposit facility much like a bank has at the Fed.
I’ve been fretting about the amount of cash accumulating in my MMF as my bonds get called, and I can’t find equally safe replacement investments with an acceptable yield. After the above thought experiment, I’m more relaxed about the situation.
P.S. I don’t know when the next financial crisis might happen.
I read you’re post twice. Thought it over, & actually DO NOT agree with your thesis. There are tons of “variables” in a financial crisis & no one knows what the possibilities are until they actually happen. Most folks never see them coming until they get hit right in the face with them. As examples, most folks never saw 2007/08 coming just like they did not see Feb/Mar. of 2020 coming. And the real problem is you can’t ignore “inflation” as it continues to kill the “retiree class”. They have no place to run to unlike the obscene pay raise the Longshoremen just received.
“ And the real problem is you can’t ignore “inflation” as it continues to kill the “retiree class”. They have no place to run”
TIPS give you a risk free return that beats inflation.
Bill Berstein wrote one of the seminal finance books, “Four Pillars of Investing” and recommends an allocation to TIPS for retirement plans. Bill was a practicing MD Neurologist that picked up finance after he retired from medicine. His point is that it is the only asset class that is guaranteed to beat inflation. Neither stocks nor bonds have the same guarantee, although we all invest thinking they will do so into the future.
Excerpts from an interview he did:
**********************************************************************************
Can you tell me, number one, why you’re a fan and also how one might implement TIPS into their portfolio?
[00:08:36] Dr. William Bernstein: Well, because there’s no other asset that matches your assets and your liabilities quite so precisely. So, let’s say that you decide that you need $30,000 of real spending power in the year 2051. However old you’re going to be then, you can buy a TIPS that matures in 2031 and know exactly how much spending power you are going to have when that bond matures.
There is no other asset that you can say that about. You certainly can’t say that about stocks, and you certainly can’t say that about nominal bonds either because if there’s bad inflation, you’re going to see the real value of that nominal bond turned basically into funny money. So, that’s the advantage.
Now, until about a year and a half ago, TIPS weren’t a very worthwhile proposition because their yields were so low. And in fact, there was a point about two years ago when the yields were strongly negative across the board. So, if you bought $1,000 worth of TIPS at that point and they were maturing in 10 or 20 years, you were guaranteed to get 80 to 90 cents on the dollar of spending power, which didn’t seem to be a very good deal. Now, real yields are approaching 2.5%, so if you buy a 30-year TIPS, you are going to get $2 of spending power in 30 years for every dollar you put in now, and that’s a heck of a deal. That’s a near historically high yield.
[00:10:17] Rick Ferri: So, a lot of different ways to buy TIPS. You can buy individual securities. You could buy a TIPS fund – short term or intermediate term – or you could buy this new product that we’ve been hearing about called iShares BulletShares TIPS, which basically are TIPS put into a portfolio or an ETF that mature in one year. And then there’s another ETF of TIPS that mature in two years, and so forth. So, you could build this ladder of – instead of individual TIPS – BulletShares. How do you feel about these?
[00:10:53] Dr. William Bernstein: Well, the BulletShares, unless I misunderstand them, don’t make a bit of sense to me. Why would you buy one or two bonds that mature in a given year? And I think beyond 2030 or 2032, is only one maturing each year. So why would you buy a fund that only owns one bond when you can buy the bond yourself for zero expense? Doesn’t make any sense.
So, there’s basically two ways to defease your retirement expenses with TIPS. One is simply to buy TIPS that mature in every single year that you’re going to be retired. That’s not quite possible because there’s a gap between 2034 and 2039. There are no TIPS that mature then.
Link to full interview transcript:
https://boglecenter.net/bogleheads-on-investing-with-dr-william-bernstein-episode-63/
I don’t understand the viability of a BulletShares for TIPS, either. I’ve bought the BulletShares corporate bond product as a way to get diversification of multiple issuers in a corporate bond ladder. But when all the securities are from one issuer it seems there is no diversification benefit.
I got one for a small balance account. You can buy in increments of $25 or so which is not possible with individual TIPS bonds.
rocks2stocks, watch out for polar bears 🐻❄️ and stay warm…
I wouldn’t worry about polar bears in Antarctica, I’d be more worried about forgetting my keys and locking myself out in the cold.
I appreciate the comments. Please bear in mind that the purpose of the post was to consider the utility of MMFs.
Ebbs and flows in the market will happen. And with that, one can always make a point by taking very specific points of time and ignoring inflation. But fact is a money market fund has not outperformed the S&P 500 over the long haul. If you think about it, it can’t happen. And you definitely can’t ignore inflation over the long haul.
Obscure winner, aka Grid special, in the investment grade preferred race is CTGSP (Connecticut Natural Gas.) Very strange issue that trades on the expert market. Only shows 4 trades totaling 2,130 shares for all of 2024. The last trade was on 9/20 for 300 shares @ 2.05, which gives a current yield of 12.2%. It is Moody’s A2 and Fitch just reaffirmed at A- on 9/5. It is owned by Spanish ute Avangrid. Appears to be a true perpetual, but I did not easily locate the prospectus. Also strange for its 3.13 par value, which is the only one like it in all of preferred land. IIRC Grid and others have discussed this before, possibly as the first entry in the sock drawer. The next highest yielding investment grade preferred, FITBI, yields 9.3% but is Moody’s Baa3, right on the cusp of heading to junk status. I am showing 186 preferreds that are investment grade, but might be off a few because ratings change randomly either up or down plus split ratings.
In any event, if you can get your hands on a few shares would probably fit nicely into your sock drawer.
We do NOT own it in any account.
Well for the exercise I tried to find something about this but didn’t get far… However, at Moody’s it’s senior unsecured that’s rated A2 and this is a preferred so it is not A2 rated if rated at all by Moodys….Didn’t check Fitch. No rating I could find either by name or by CUSIP # 207651209
Although I don’t know if the dated date is phonied up as a maturity date is on a perpetual preferred at Fidelity, they show it’s date 1/1/1910……if that’s accurate no wonder you couldn’t find anything….. Not much accomplished but that’s enough exercise for me for the night……… Couldn’t find any reference to this in Avangrid’s 10K either….. I could have missed it if it’s there…..
2WR, here is Fitch’s rating. You are correct, it is the senior unsecured that is A. This preferred is BBB+ which is IG, but not as high as I misspoke. Still the highest yielding IG preferred.
https://www.fitchratings.com/entity/connecticut-natural-gas-corporation-80464092
Tex – Just so you know, my “exercise” was not to see if I could put a “gotcha” on you, I was just testing my own abilities to maybe find a way to a prospectus or the equivalent…. I gave up before succeeding……..
Re CTGSP:
I’m wondering if this is one that still has certificates as MSEXP did, which would mean anyone holding it without certs doesn’t have “good delivery.”
When that came up with MSEXP, there was a discussion with the transfer agent that got a little scary of undoing all the trades that had occurred for a long time if the certs couldn’t be located by DTCC.
If you think odd things like this can’t happen, I offer this one: When EXAM was bought out for cash I had a fellow trader who went out short into the tender a tremendous number of shares into the tender. You should never be short when a tender expires. He did so because the stock was .15 above the tender price.
Normally, the clearing firm would settle up with a cash payment to the clearing member on the other side of the trade. That was done.
Here’s the odd situation: At the time the tender expired there was a lawsuit claiming the tender price was unfair. These “strike suits” are so common that they occur on every deal and traders generally ignore them. In this case , quite some months after the tender expired, the suit settled for an additional cash payment to all holders at the time of the tender expiration.
The trader who had been short and totally forgotten about this ended up with
a $110,000 liability for the additional amount of the settlement. He woke up to find his account had been debited by this amount!!
From the Wayback Machine:
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Feed: Comments for Innovative Income Investor
Posted on: Tuesday, September 28, 2021 9:57 AM
Author: Rob in Vegas
Subject: Comment on READER INITIATED ALERTS by Rob in Vegas
Another illiquid flipped to “Dark or Defunct” and “Pink No Information” today….CTGSP. This is the Connecticut Natural Gas 8% $3.125 Preferred, which is now a subsidiary of Avingrid (AGR). AGR is a $25+ Billion electric utility.
This one has been one of Gridbird’s favorites in the past….but not sure if he is still in it? Non-redeemable and only 27,000 share float.
Still paying a $.0625 quarterly dividend this month, but the bid is down to $4.50. Sold the rest of mine in June at $6.45.
NASDAQ OTC says it will still trade on the “Expert” Market? If possible, will definitely be looking to buy some of this anywhere near $4/share.
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(Note the date of that posting – it was the same day that SEC Rule 15c2-11 became effective.)
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According to my archive, Mr. Pig Pile owns a “pile” of CTGSP … complete with instructions to his family to “NEVER SELL CTGSP”!
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Enjoy the weekend.
ESW3/Tex/2WR,
It ranks as my biggest “loss” in the last 25 yrs or so. I still have it, still getting paid, and yes, I have a giant capitalized note to never sell it!!!!! It goes into Grid’s “permanent annuity” pile.
I fell asleep at the wheel at the critical moment for this and simply forgot to unload before D-Day. Still makes me upset they took my market away for this one. It was definitely illiquid but very viable.
Pig’s comment about the painful experience holding CTGSP through the “expert market” mess prompted me to take a look at how all of the issues have performed. Normally I would post this on the Expert Market aka Rule 15c2-11 folder, but thought it would fit in better to this thread. Our resident Rule 15c2-11 expert, ESW3, said the expert market went into effect 9/28/21 so I decided to look at the results from 12/31/20 through the most recent trade. I used “most recent trade” because some of the issues did NOT trade yesterday 10/4/24. I eliminated issues that are not currently paying out, and the one convertible (AMBKP). I included issues without regard of when they went onto the expert market under the theory that any negative bias would appear after that occurred. This gives us 26 issues (18 preferreds, 8 babys/trusts). Expert market has not exactly protected small investors. Actually, it is been quite ugly based on price only, not total returns.
Class, Median %, Average %, from 12/31/20 through latest trade (roughly 10/4/4)
PFF (largest preferred ETF): -13.9%
Expert preferreds: -38.7%, -31.8%
Expert babys: +11.5%, +2.5%
Details, sorted by type, then highest to lowest return
LTSAP,Pref,6.6%
SLMNP,Pref,-10.9%
AFSIB,Pref,-11.6%
AFSIC,Pref,-12.7%
AFSIM,Pref,-12.8%
AFSIN,Pref,-12.8%
AFSIA,Pref,-13%
AFSIP,Pref,-13.1%
HMLPF,Pref,-37.7%
AWRY,Pref,-39.6%
BANGN,Pref,-44.3%
DMRRP,Pref,-45%
PSBYP,Pref,-48.5%
PSBXP,Pref,-48.5%
MSSEL,Pref,-48.6%
PSBZP,Pref,-50.8%
GMLPF,Pref,-60.5%
CTGSP,Pref,-68.5%
LTSK,Baby,17.8%
LTSL,Baby,17.3%
LTSF,Baby,17%
LTSH,Baby,12.4%
AATRL,Trust,10.7%
AFFS,Baby,-14.7%
AFFT,Baby,-15.8%
KTBA,Trust,-24.8%
Sounds about right Tex, As of this moment I’m sitting on a 55.3% loss (added dividends received). By my calculations in exactly 15 yrs I will have finally broken even!!!!! At that point, I guess I will just bask in the glory when my grandkids are calling me a genius for having a 12% paying utility on my books, hahahaha.
Separately, Good going SEC. Our government, its here to help.
Hey Pig Pile,
Where was CTGSP at $ when you were looking to unload before they moved it to expert (I see 6.50ish in May of 2021)?
Just interested (as many of us are) in the impact of expert market OTC.
Yield,
Mid-6’s for most of 2021 but late summer it did dip into mid 5’s. I have notes on my thoughts during that time. Tex’s post prompted me go back and read it. Apparently I did not forget to sell it as I thought I remembered. When it dipped to mid 5’s, instead vowing at that point just to keep the shares and deal with the cap loss, fearing I’d never hold them again if I sold. They had been a source of constant cap gains (buys and sells), so the shares had been pretty good to me. Somewhere along the line I also decided to move the shares over to my Roth at the much lower price. Still haven’t accomplished that. Interestingly enough, things changed on the move from TD to Schwab. With TD, was allowed to keep a GTC sell order out there, but Schwab deleted that and does not allow an open sell order for this one.
Oh man,
Keeping trade notes can be really helpful. The TD move to Schwab was not very beneficial to me also. If you were keen to get GTC sell going, you could likely move the shares to Fido. I did speak to quite a few people over there and was told that they will take in anything but just won’t allow purchase of anything. Perhaps it is worth a call to the “Premium Services” trade desk at Fido if that is something you are still interested in. IBKR might take it as well.
I hold some real estate rentals in the are covered by Connecticut Natural Gas and they have a powerful monopoly. I hate being a customer but wouldn’t mind being a shareholder to hedge. I’ve made extensive efforts with a variety of brokers to purchase CTGSP and am very keen to acquire a bunch but haven’t figured it out yet.
Thanks for protecting us, SEC…
Yield, Thanks for Fido advice. At this point CTGSP is in the never sell category. The loss is booked in as far as I’m concerned, will just take the income. Hoping I can live to see the day I see a profit. Grid’s permanent annuity idea in full bloom with this one.
My $.02. My magic 8 ball sees longer term interest rates increasing for the foreseeable future, and short term rates more stable. So, my strategy is to invest in preferred stock with variables tied to the 5 yr treasury with an add on of enough to make them profitable. Those are not common. But, if interest rates do increase profitable preferred stocks will return at some future point. In the meantime I like these: FLBL, HZYD, JAAA, LOZ, SEIX, ATLZ, and SPNT-B. The Qualified income opportunities appear slim at the moment.
Jack, Interesting. I was talking to some advisors and know nothing about the world of ETF’s They were suggesting going that route rather than individual preferred and a lot pay monthly so you’re compounding the dividend growth. A couple of your symbols I couldn’t find and I think HZYD should be HYZD
Corrections: ATLCZ, , LONZ HZYD. I think I’m going dyslexic in my old age. Virtus Seix Senior Loan ETF (SEIX)
Likewise–Not finding LOZ, SEIX, ATLZ ( tried variations). ???
SCE-H is post ex-date and post 3mL+ 2.99% rate change to a lower yield. It’s trading near par, indicating so far that the market is ready to pay par despite the lower (but still substantial) yield.
It will be interesting to see if other floaters hold their price level even with lower yields. It’s all relative, right?
May be wrong page for this TERM SOFR post …. just found this buried on the CME site re the ## with a one day lag on data …..
CME- Term SOFR….
then page down several pages to
Historical term sofr data
displays one day lag ( Thursday Oct 3 ) and prior 5 days info ….
Data shows 4.590%
Others may have found this much earlier.
The same site had displayed the rates on the same CME page , yet closer to pg top. Now that seems to be blurred .
Maybe I’m late to find the way around. Jim
Hi there my income loving III’rs, hoping each of you and your families are well and achieving your goals and dreams. One of my old institutional clients that now works for Johnson & Johnson sent me this update from Schwab on their asset allocation/sector market outlook; he primarily wanted my thoughts on where I have my portfolios allocated https://www.schwab.com/learn/story/stock-sector-outlook?cid=31236036%7C4541531%7C212606088%7C384516093
I have not posted for a while as I’ve been traveling, primarily visiting my family/friends and one of my properties in Jerusalem near the Kotel for the New Year .https://aish.com/western-wall-page/ I was here when our friends the Iranians (great people, evil government) sent their 180+/- Shahab-3 and the Ghadr and Emad missiles toward Israel. Thankfully and ironically, only 1 person was killed a Palestinian in the West Bank due the shrapnel from these ballistic missiles (always the innocent that are hurt). I am extremely long energy and some of the accounts are long KRP, APA, CVX, XOM, BP, SHEL,COP and EOG (in order of position size). I am headed back to Ft Lauderdale tomorrow and then traveling to Boston to watch my friends son (my sons best friend) that plays for the Boston Bruins against my Florida Panthers. Let’s all hope and pray this New Year brings good health, peace (we could all use more peace ✌🏻) and understanding, I am Azure
Azure, are you flying your own jet to Israel?
Hey there LT, I don’t own the jet (thankfully), I have an old client/friend that our families vacation together for many years that owns a fleet of 14 planes ✈️ he rents out and he won’t take my money. An interesting story is that he called me at midnight a few years back and wanted me to pick him up at a private airport in Ft Lauderdale. When I got there he was testing out Michael Jordan’s (yes THAT Michael Jordan) old plane to see if he wanted to buy it. The planes interior was all ripped up, but it did have a great sound system, cool custom paint job and a couple bedrooms to nap; we flew to Atlanta and back that evening. I looked for any sign of Jordan memorabilia around each cabinet in the plane. I also occasionally rent space/buy miles on a couple private fleets, but prices have definitely gone up and many won’t fly to many of the destinations I’d like to go. Wishing you all the very best and profitable investing, Azure
Azure I was looking at fertilizer companies trying to find a company whose common was down off it’s highs and paying a decent dividend. Came across one that looked good until I saw it was based in Israel and mining Dead Sea deposits for phosphate and other minerals. Decided too high a risk with the war and shipping. So still looking.
Charles, do you mean ICL? Many people all over the world 🌎 come to Israel to go the the Dead Sea. They put mud on their bodies and it treats various skin conditions because of the minerals in the mud by the sea. You can’t sink because of the salt in the water and it’s the lowest point on earth; very interesting ecosystem in the area.
Yep, ICL was the one I found. Decent dividend for a common stock and a play on Ag and commodities. MOS seems a better play being it is Canadian and pays a decent dividend. Ships by rail and port. Still depends on what is happening to the American farmer next year. NTR is another. What is worrisome is in reading about Ag companies is the sales are down. Mention of prices for crops is down ( over production, competition in other parts of the world, Tariff’s ) and more worrisome is defaults on loans are up.
Charles, I’m not sure if you have a subscription to FAST Graphs. After taking a look at the three options you mentioned, I would not recommend them. That being said, if I had to pick one it would be NTR.
Jimmy I wasn’t recommending anything. I was thinking about dividend and growth and a sector play, nothing as a long term hold. I’m thinking just too much to learn in this sector. If I was a farmer or commodity broker I would be watching the weather, price per bushel, sales of equipment and on and on .
MSEXP update:
I’m considering paying for a legal opinion the stock is not subject to 144 . The company’s contention is they have no way to track movement of the securities since they were issued as part of the purchase of a private company 30 years ago. I contend the stock couldn’t be sold in the public market with a rule 144 restriction, and in any case the restriction would have expired by laches.
Anyone with specific legal knowledge would be appreciated
I think you’d lose that one.
MSEXP – yes, any Rule 144 restrictions on these shares are long gone.
MSEX *newly issued unregistered shares arising as a result of converting MSEXP* – subject to Rule 144.
My read is that it’s just corporate laziness on MSEX’s part. They’ve had thirty years to register the shares underlying the convertible and just never got around to it.
Of course, listen first to an attorney if you have one looking into this, not me.
The response I got was if they didn’t know if the MSEXP was still subject to rule 144, any shares issued on conversion would have to be subject.
The response I got was if they didn’t know if the MSEXP was still subject to rule 144, any shares issued on conversion would have to be subject.
Seems to fly in the face of reason, no?
Maybe I’m not understanding?
Well given the history on this thing it wouldn’t surprise me if the company doesn’t quite get it either.
But the way the ’33 Act goes, if you want to sell shares on one of the exchanges, the shares either need to be registered, or you need to find an exemption or exception to the Act.
So far as I know (and I looked for prospectuses) Middlesex never registered the common shares that MSEXP would convert to. So Rule 144 gives you the exception to trade those new common shares… eventually. The status of MSEXP is irrelevant to that analysis, the new MSEX shares are their own problem.
But we’re probably in a zone where an attorney is more useful than layman analysis. Waiting the six months seems cheaper, even if I’m wrong.
Several perpetual BBs and preferred can be considered busted due to reasons such as conversion ratios or TARP related tax considerations. Appreciate any listing of such securities. Regards from Thailand.
Back in November 2021 I bought a half position in TELZ with, I have to admit, not much more analysis than “there’s a market for that LNG, it oughta be fine.” Today I closed the position at my purchase price, so I guess my bet paid off, but the coupon was not really worth the uncertainty. Shoulda bought some more under nine bucks last year, I guess, but at least I didn’t sell.
Mike D. – Don’t be too hard on yourself in hindsight on this particular one. Only reason this panned out so nicely for TELZ is because of the WDS merger otherwise these BBs would be trading probably half par at best right now.
Finally approved today after gaining US Nat’l security approval.