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Sandbox Page

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

That link will get you to this page.

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

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

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

1,410 thoughts on “Sandbox Page”

  1. BWSN v BWNB – not that Babcock & Wilcox is a recommendable credit, but how can there be such a large a spread in YTM between these 2? BWSN is Babcock & Wilcox Enterprises, Inc. 8.125% Senior Notes Due 2/28/2026 and its YTM @ 24.22 = 9.73%… BWNB is Babcock & Wilcox Enterprises, Inc., 6.50% Senior Notes Due 12/31/2026 (10 months longer) and its YTM = 13.28% and it’s about to go x-div. How can this be the right spread? It’s the same credit, isn’t? Does Mr. Market think BW will make it to 2/28/26 but not to 12/31/26? BWNB seems cheap if you can stomach the credit, doesn’t it?

    1. 2WR, I’ve been watching this situation, too. I have accumulated a half-sized position in BWNB since late July, and I’m almost exactly even for now. If I had more of an appetite for this risk, I’d buy more. If I held any BWSN, I’d sell it and use the proceeds to buy BWNB.

      1. Yes, I have all of 300 shares of BWNB. I swapped into them and out of BWSN last Dec…. sold BWSN @ 24.40 to buy BWNB at 20.60….. so it’s narrowed a little bit but not dramatically as you would think it should. I’m not overly comfortable with the credit to up the stakes..

        1. I did the exact same thing. Don’t understand why anyone would keep bwsn and not swap to bwnb at this point.

  2. AQNA – OK, I admit I’ve not paid close attention to this one when it’s been discussed on here, but I just jumped in this AM at 25.18. On the surface, it seems like an interesting time and price to buy – As F/F AQNA will begin floating on 10/17/23. That means that they could possibly announce a call as late as 9/18 since if the new rate was calculated today, the new coupon would be 9.34% approx. At 25.18, that’s 9 cents below par after accrued and would be something like 9.88% YTC….. What’s not to like? I remember there’s a back story about a failed acquisition of KY Util and there’s an ongoing attempt to sell their renewables business, but what’s the rest of the credit story? Rating agencies seem to have AQN in limbo as “developing” based on the renewables story, and AQN claims they’ll use proceeds of a sale (if any) of the renewables business, but is there more to the story? I also see that AQNA is callable only on interest payment dates so if no call by 9/18 then holders will get at least one quarter’s payment at the new rate…

    I had proceeds come in from PLYM-A to put to work, so I jumped in relatively blindly.

  3. Anyone having problems accessing TDA account? Even tried reset- won’t recognize either email I have (only using one).

  4. UP today…

    30YR Mortgage – 7.33%
    10YR Treasury – 4.3%
    Brent – $90.70
    WTI – $87.61
    MMFs – VMRXX 5.29%, VMFXX 5.27%, SWVXX 5.23%

    DOWN today…

    ENB – 5.89%
    Total Rig Count – 631 Rigs, lowest since February 2022
    Mortgage Applications – 27 year low

  5. If any one has interest the South Jersey Bond 5.02% bond CUSIP 838518AA6
    that matures 4/15/2031 is having a fire sale at $76.25 today with a yield of 9.5%. I bought this for my socks drawer a while back when it when it was around $82 yielding 8%….. Wish I had waited!!

    1. Where did you buy it, and where did you see that quote? Schwab doesn’t seem to allow online trades, at least.

      1. If you are referring to the South Jersey bond I purchased it via my Vanguard account. Got the price from my Vanguard account. This one is a Gridbird special…… He owns it also or did.

        1. Dj, I bought the 2031 bond when it was yielding around 9.5% earlier in year and sold it off when it got to 7.5%. I then proceeded to buy almost a couple thousand shares of the old SJIJ in the upper 12s on a couple different transactions by calling in Vanguard bond desk. We will see in time if it is a moonshot out of the ballpark, or a strike 3 swing in the dirt. Likely inbetween being the credit quality hasn’t changed and doesn’t appear to be based on a Fitch report. Be pleased just collecting an almost 11% annuity like on it as long as it pays, ha.

          1. Ah…. Wondered if you flipped it. I may have to wait a little while. I don’t think this one will get suspended though, but just my gut feeling!

            1. dj, South Jersey is just fine. No nefarious debt loading on the hold co occurred. In fact Fitch has same ratings on it now as before they were acquired…And they view IIF as a good steward.. And percentage of hold co debt (which is SJI) will actually decline.
              Fitch Ratings – New York – 29 Jun 2023: Fitch Ratings has assigned first-time Long-Term Issuer Default Ratings (IDRs) of ‘BBB’ to South Jersey Industries, Inc. (SJI), ‘A-‘ to South Jersey Gas Company (SJG), and ‘BBB+’ to Elizabethtown Gas Company (ETG). The Rating Outlook on all three is Stable. Fitch has also assigned ‘BBB’ to SJI’s senior unsecured debt and ‘BB+’ to its junior subordinated debt. Fitch has additionally assigned ‘A+’ to SJG’s senior secured debt, ‘F2’ to SJG’s senior unsecured Short-Term debt and ‘A’ to ETG’s senior secured debt.
              IIF Ownership Beneficial: SJI is 100% owned by an affiliate of the Infrastructure Investments Fund (IIF). IIF is an open-ended perpetual structure established in 2006 with no required exit date which ensures a long-term investment horizon. IIF plans to inject equity from 2023 to 2025 into SJI primarily for the renewable natural gas projects within the RNG DevCo, the buyout of the remaining 65% ownership in REV LNG, and for general corporate purposes. The equity allows SJI to improve its consolidated credit profile materially.
              The equity injection will also drive the proportion of parent level debt to fall to 40%, from 49%, over the next few years. SJI does not pay a management fee to IIF nor is there a target distribution to IIF. Fitch understands that IIF does not plan to place incremental debt above SJI, a credit positive. Private ownership however impairs transparency.
              The biggest risk is needing to get out and sell. As its possible the bonds become untradeable also if bond desk doesnt get continued waivers from rule 15c2-11 that generated the “expert market” morass.

                1. Stephen, there are no symbols for delisted baby bonds that get jettisoned to the bond desk. They trade by cusip. The cusip is on this link below. You would have to call in a trade to bond desk, and potentially deal with hassle of getting someone who says they cant buy it when they actually could.
                  Make sure you understand the pros and cons before buying something like this. While the company and its finances are just fine, the investing situation of owning a security like this is very nebulous/dicey.

                  1. Thanks for getting back to me, Gridbird. I thought, somewhat mistakenly, that SJIJ was a delisted preferred, a type of security with which I am familiar (LTSA, GMLPF, HMLPF, AFSIB, AFSIC, AFSIP, all of which I presently own). Stephen

              1. Thanks Gridbird. Figured you were on top of this one. I bought this one with “spare cash” (ha! That sounds a little strange!) And don’t mind the 8% yield it returns if it returns to what I paid for it. Gets even better if I hold to maturity, assuming I live this long !

  6. Anyone having problems just getting quotes out of the public portion of E-Trade? Very squirrelly- tries to load over & over. Url has etrade.wallst etc

  7. A MUST read if you really want to understand global economy and exactly where we are: Michael Hudson: “Killing the Host”, written 2015.
    A broad and academic view in layman’s terms. History, Power and Fact brought up through broad historical facts, into your very own,identifiable experiences during your life, as well as the policies that have influenced it. VERY well footnoted and objective. Hard to beat. I find myself trying NOT to explain anything to anybody anymore. The good news? The facts and rationales of history are there and describable in this methodical presentation. Make sure you REALLY want to understand Global Economics though.
    Bot a cheap, used copy…best investment book I have ever read.

    1. My favorite saying goes somewhat like “what we learn from history is we fail to learn from history.”

    2. Thank you for mentioning the book. Full disclosure: I have not read it, and am reluctant to do so, as the author is an avoid marxist, as was his activist father. Did you find it interjecting any “modern” communist/capitalist theories?

  8. With TLT (20+ YR TREAS) historical lows with price cut almost in half, could it be time to slowly nibble if rates begin to decline? In the past, impressive cap gains have been made.
    Thoughts on dipping in, and when to do so, and when to do it in size?

    1. I am nibbling into TLTW (IShares 20+ Year Treasury Bond BuyWrite Strategy ETF) instead of TLT. 15%+ yield. Maybe once I see the Fed drop rates, I may buy some TLT.

    2. This topic has been tossed back and forth a couple of times on this site previously.

      The 20year Treasury Bond rate rate has fallen more or less continuously from a high of 15% in 1980 to 1% in 2020. That is 40 years of decrease.
      During the 10 years up until 2021, inflation was basically nil..

      In 2022, as a result of the spike in inflation, the Fed raised interest rates faster and farther than it ever has..
      Inflation has moderated, but is still twice the 2% rate the Fed is committed to.
      The central question is:
      – Will the Fed keep rates high, including possibly a further increase later this year to drive inflation down to its 2%? or
      – Will it begin to reduce rates to prevent an interest-rate caused recession?

      TLT is not a normal, but low, sell high, issue.
      There are major economic tectonic plates with huge economic and political forces pulling both ways.
      IMHO I’d not try to gather pennies in front of a possible steamroller.

  9. This is not earth shattering news but for those who have been avoiding using the Fidelity bond yield calculator due to how screwed up it has been functionally on how you entered numbers and dates, it looks as though they’ve finally fixed it – https://digital.fidelity.com/prgw/digital/priceyieldcalc/.

    Imho it’s the most flexible online yield calculator for inputting data on YTC vs YTM and special cases such as when payment dates do not match up with final maturity dates. can be used for $25, 50, 100, and 1000 denomination securities and monthly, quarterly, semi-annual, and annual payment schedules..

  10. Friday Sept 1, re Schwab Street Smart Edge platform down ?????
    Seems to have occurred at the open…..

  11. Just had a decent sized amount of $$$ redeemed yesterday from a 6-month treasury maturing. What to plow that money into now? Hmmmm….

    1. Took a non-callable JPM 3.625% coupon Bond maturing 5/13/24 at 98.699 – roughly 5.5% YTM/YTW. Sorta like a 5.5% CD…a slight bit more risk but negligible – If JPM were to fail, we’d have a lot more problems in my estimation!

      Got some more maturations coming next week and the end of September.

      1. Maturation city for me next month also. Not sure if you have TDA, right now they have 5.65% 12 month (and a 15 month) CD from JPM. Not sure that will stick around long enough though for me though as most of my CDs maturing mid-month. TD Bank has a 5-Yr Bond offering 6.35% that is under consideration also. Feeling on the Bail in Language is using your logic, if it comes to that we have other problems, ha!!!!

  12. CORRPRA CoreEnergy dividend suspended – cumulative = 32% yield
    Up 19% in last 5 minutes before close
    1 1000 share purchase, multiple smaller buys

    1. Just looking around after spending the day outside in gorgeous pre-Fall weather, I was reminded by seeing a whole lot of high volume end of day trades on a whole lot of issues in both directions tha this is the last day of the month…, It looks like CORR-A could have been one of those impacted by this phenomenon most probably by mindless bot buying or selling mandated by index balancing by funds who are indiscriminate on price…. Same end of day high volume pattern seemed to account for about half of CORR-A’s performance.

  13. Getting weird numbers on GBDC today- some brokerages and chart services have -44¢ (-3%), or -7¢. Messed up

    1. Even Golub’s site chart says -11¢ at 14.35 now. But the chart says for 8/30, $14.82 (-47¢) !

      Aha- ex today at 37¢

  14. Has anybody been swapping out low yield/price preferreds for slightly lower yield babies?

    I got sick of looking at the PSEC-A in my taxable account go down. I sold the PSEC-A yesterday at $15.66. I then turned around and bought CNO-A @ 15.51 and BEPI @ 15.54. After the horse trading was done, I ended up with one more share than I started with. I still have PSEC-A in my IRA and plan on leaving it there for now.

    I know the combined yield took a small hit, but the overall credit quality and safer instruments (IMHO) were good enough for me (for now). I plan to hold these two until they mature, reach par, or to a price I can swap them out for something else again.

    1. Yeah I started doing that a while ago, with things like my sach-a, swapping for various of their bonds. I wish my psec-a was in a taxable acct!

    2. if it is in a taxable account, your after tax yield could actually improve.
      PSEC-A is a RIC, so it pays whatever the underlying fund does
      CNO-A is actually a baby bond, so it pays interest
      but BEPI is a preferred stock, so it pays QDI.

      1. @Justin

        My taxable income this year is lower compared to last. I used to prepare taxes, so I know how to come to the number I “want” legally.

        RE: BEPI

        From Quantum Online….

        “Brookfield BRP Holdings (Canada) Inc. 4.875% Perpetual Subordinated Notes
        Ticker Symbol: BEPI CUSIP: 11259P208 Exchange: NYSE
        Security Type: Exchange-Traded Debt Security”

        From III baby bonds page…

        Brookfield BRP Holdings (Canada) Inc. 4.875% Perpetual Subordinated Notes

        babies = baby bond from my OP

      2. Justin – a quick looksee says BEPI is a subordinated note paying interest, not a preferred.. “The Issuer will pay interest on the Notes quarterly on every January 30, April 30, July 30 and October 30 of each year during which the Notes are outstanding (each such quarterly date, an “Interest Payment Date”). The first Interest Payment Date will be April 30, 2022. The Issuer will pay interest on the Notes at a fixed rate of 4.875% per year in equal quarterly installments in arrears on each Interest Payment Date.”

        1. Hi 2WR

          BEPI – Unusual terms for exchange traded debt – no maturity. and they can defer paying forever without defaulting. – This sounds more like a preferred.

          The prospectus says
          “The Issuer may, at its discretion, elect to defer any payment of interest (in whole or in part) which is otherwise scheduled to be paid on an Interest Payment Date; provided that any such deferred interest shall become due and payable on the date the Issuer declares any distributions on any of the Issuer’s common shares or preferred shares. If the Issuer elects not to make all or part of any payment of interest on an Interest Payment Date, then neither the Issuer nor any Guarantor will have any obligation to pay such interest on the relevant Interest Payment Date. Deferred interest will accrue, compounding on each subsequent Interest Payment Date, until paid. Such deferral will not constitute an Event of Default (as defined herein) or any other breach under the indenture in respect of the Notes and the Guarantees (the “Indenture”) or under the Notes and Guarantees. See “Description of the Notes”. Further, holders of the Notes may only have claim to the principal amount of their Notes upon certain events of bankruptcy or insolvency of the Issuer or the Partnership. See “Risk Factors — Risks Related to the Notes — The Notes will have limited events of default”. ”

          Oddly, QOL says
          “Distributions paid by these debt securities are interest and are eligible for the preferential income tax rate of 15% to a maximum of 20% depending on the holder’s tax bracket”

          1. @Llabs

            RE: BEPI

            That’s right it’s a perp baby (debt). There are a few of these running around in the bank & insurance preferred page on III. PSEC-A was a perp as well (equity) and has a junk rating.

            The difference for me now is that one is debt (BEPI) and the other equity (PSEC-A). I am higher on the stack right now with these two baby bonds, but I gave up approx 30 bps for that privilege. I also have additional “di-worse-ification” by having two issuers instead of one. The combined credit rating is also slightly higher with BEPI being IG (CNO not so much).

            I am fine with letting these two move up and down due to the low coupons and loooong maturity.

        2. BEPI pays a qualified dividend and is perpetual. To me, that is a preferred stock. If it was debt, it wouldn’t pay a qualified dividend. At least quantumonline says the dividend is qualified.

          1. Yes this issue has many of the properties of preferred stock, however, it is clearly debt and payment of the interest on this debt is senior to that of the preferred equity. So they pay $.01 of common or preferred dividends they must pay the interest on these notes in full. Here is the relevant language from page S8 of the prospectus.

            The payment of principal, premium (if any) and interest and certain other amounts on the Notes will rank senior to all obligations of the Issuer in respect of its own equity and in respect of equity (including preferred equity) that has been issued by any Guarantor or Brookfield Renewable Power Preferred Equity Inc. (“BRP”) (including pursuant to any guarantee by the Issuer of the existing equity obligations of any such person) but will be subordinated in right of payment to all present and future Issuer Senior Indebtedness (as defined herein).

            1. Why does bepi yield so much more than bep-a (7.6 vs 6.7) if it is qdi, no k-1, and higher in the stack?

      3. Justin, Is there a list of all preferred securities whose payments are classified as return of capital? I need to load up on those as since I have a massive capital loss carryover I need to use up before I die (hopefully).

    3. NWGG-
      Have you considered fixed to floating notes? Some have cap appreciation potential plus decent to nice interest.
      Just an alternative, but other types are certainly still available.

      1. @Gary

        Thanks for the suggestion.

        I have quite a few floaters already. I wanted something straight forward to get me back to par from the price decline of PSEC-A.

  15. Looking for suggestions on tracking dividends. Used to use Google Docs until the formulas stopped working reliably. Thinking of using excel and downloading from FD active trader pro, but not motivated to continuously hand jam updates in every month. Basically want to track by month/year.

    1. Hi Sfinley. Your brokerage firm may provide it. I track my monthly dividends and interest in google sheets. Each month Fidelity provides the month’s total dividends and interest which I copy into google sheets so I can track my monthly totals. Fidelity also keeps track of which companies paid those dividends and interest but I don’t track that.

      1. I can try that. Was thinking something like that. Was hoping on keeping the manual effort to a minimum.

        1. Schwab totals each page in the list of divs & interest- can be downloaded into a sheet that can be copied for specific dates after setting it to divs & interest- then copy into a spread sheet and enter the formula for SUM of the month’s range of cells.
          Nothing specific summarized by Schwab- but it is an item total in the monthly statements.

  16. EBBGF and EBBNF – Anyone have an explanation why these continue to get cheaper even though they are seemingly very cheap already???? As I remember all ENB preferreds are pari passu but not all actually have the rating. All that do I believe are rated Baa3/BBB-. and those that might nor are of equal status in the corporate stack. Both these are resets vs the 5 yr US Treas and both have reset recently. They trade in USD. EBBGF has coupon now @ 6.7037% and last trade = 20.35. That’s an 8.24% current yield…. EBBNF is now 5.8579% and last trade = 18.49. That’s 7.92% current yield…. Both trade on TSX.com as well as ENB.PR.V and ENB.PF.U. Value pricing for a huge, stable investment grade pipeline company like Enbridge?

      1. I’ve had EBBGF in an IRA and have traded in and out of it with no tax consequences, first with TDA and now with Schwab.

        1. Something must have changed at schwab or at the company making the payments from Canada. I had EBBGF in an IRA when it was first issued and got tax withheld every time. I fought with everybody and made no progress, so I finally sold it all about 8 years ago (?)

      2. Some brokerage firms (such as Raymond James) do withhold 15% on dividends paid by these securities, so not ideal for an IRA from a dividend perspective. However, still plenty of capital gains if rates go lower in the next couple years (and these don’t reset until 2028). To me, I think the capital gains potential is worth it at these prices, even in an IRA.

    1. 2WR, This appears to be about in line with the “bird in the hand” on CAD resets. The ones from various CAD issues that reset early next year have a shot of double digits….If you play the game and the reset yield hits todays mark down the future without dropping, Fortis just reset and is IG and is around 8.2%, while Emera (BB+ or so) is trading in the 8.4 ish range.

      1. That’s what I was looking for, Grid – my scope of comparisons to other CAD issues is very limited. So the anomaly is not as much ENB related as opposed to comparable Canadian preferreds vs. similar US preferreds. It just seems to me that particularly in the case of a USD Canadian preferred, where there’s no currency risks to concern you, that there’s very few justifiable reasons for CAD to be trading substantially cheaper… Yes there is the tax withholding thing that seems to be a pain at some brokers more than others, but as per your experience, I’ve held most of mine in JTWROS and accepted the 15% withholding because it’s easy and painless to reclaim at tax time… Turbotax takes care of it for me painlessly. And, at least at TDA (who knows once I get Schwabbed?) there’s been no withholding in the IRA at all….. That’s theoretically the way it should be at every broker based on the tax treaty but I know that’s not always the case..

        I excluded EBGEF in this because as you say, these two are “bird in the hand” CAD resets….. EBGEF is ENB’s third USD preferred and it will reset vs the UST 5 year on 3/1/24…. Were it to reset today it would go from 5.3753% to 7.097% coupon and at last trade of 19.60, a current yield of 9.05% and present day current yield of 6.85%.

        Here’s ENB’s summary sheet on all their preferreds – https://www.enbridge.com/~/media/Enb/Documents/Investor-Relations/DividendandShare/ENB_Securities_Prefs_Summary.pdf?rev=a8d979ebbf614fb680b434502e5ec8d4&hash=21E8B86734C2868A893D593FC2E333E0

        1. Generally 2WR, I see a pattern. The Canadian fixed are going to pay “x”. The ones that just reset are going to pay “X+” and the ones with in the next year or so are going to pay a projected “X++” rewarding you with the risk of waiting and winding up with “X-“ if rates drop.
          For example an issue I own. I have been buying the fixed rate Canadian Utilities Series DD near 7%. They have a reset that resets in late 2025 at almost 9.5%. Meanwhile if you buy today you have to suffer with a 5.64% yield to chase the potential 9.5% in 2 years. Me, I prefer the 7% fixed bird in hand BBB rated issue that is way below par.
          By the way since you are lazy and not very tech aware. I will give you a link to some Canadian preferred spreadsheet work I have created. And if you believe what I just said, I have some oceanfront property in Arizona to sell you, ha. Seriously this is pretty good, but I didnt create it. I believe a member from Trapping Values excellent SA investing site did it.

          1. Oh boy, a spreadsheet! You’re sort of right about my tech awareness Grid because as I’ve admitted in the past, no matter whether you call it Google or Xcel, I’ve never ever used one nor taken the time to understand how they work…. In the back of my mind they remind me of calculus, the only college course I ever failed – In order to make it work you have to set up the problem properly….. I never got the hang of it in calculus and feel the same way about spreadsheets…. LOL And BTW, I knew you were joking the moment you said it was something YOU created…. haha.. I’m guessing if you and I collaborated we’d still never be able to create something like that…….

            1. 2WR, My money is on you figuring out how to make one before I can! I have never attempted to make one, nor will I ever.

    2. 2WR, Not too familiar with Enbridge but I see a lot of preferreds etc. (some that I hold!) that yielded what these two did when they were at par that have slipped in price until the yield gets to around 8% or so. They have slipped a little further if the issuing company is considered risky compared to Enbridge. My guess is Mr. Market is saying the they aren’t worth it when the yield is so close the what Treasuries will yield so the price goes down to up the yield. Just my two cents.

    3. 2wr re EBBGF and EBBNF
      I’ll wager the problem is the ongoing tug-of-war between Trudeau gov’t and fossil fuel industry over proposed carbon emissions reduction regulations. The draft proposal to cut emissions 40% has been out for six months and industry has labelled it “unworkable.” Gov’t says it will issue “a reg” sometime in the near future.
      I, too, like the ENBRIDGE combination of BBB and high floating rate and purchased 300 shares. FIDO doesn’t allow online purchase of EBBNF – had to go through phone International Sales – pay $82.95 total in fees to buy at $18.40 Ask – down 10 bps fm yesterday. Sales rep had to read warnings of danger of foreign security and floating rate for me to acknowledge. He mangled the yield explanation but, thanks to your detail, I wasn’t concerned

      1. Sounds like a good reason to always have at least 2 brokers to deal with…… You don’t say which one you bot, but I bet it’s not EBBGF. Of the three that’s the only one that FIDO allows me to tee up for purchase online, or at least on Active Trader Pro – and for free to boot….. At TDA I have to pay a $4.95 per trade cost (long time ago bargained down from 6.95) but I can buy all three there…. And if you want to have some time wasting waste kind of fun some day, try dialing Fido up to get an explanation as to why you can only buy the one symbol but not the other two… Oh, you’ll get one one I’m sure, but it won’t be logical….

        And yes, I suspect the Trudeau thing along with Michigan Line 5 political grenades I’m sure are certainly not creating halos around ENB, but when you look into the company I know I at least was flabbergasted by their overall size and how very little damage would be done to the company in dollars and cents term if that went against them…. ENB’s international scope is just mindboggling. And on the oil/fossil fuel front, I find it interesting to see how their efforts are going toward planning for a future that de emphasizes fossil fuel…. sort of a burning candle at both ends kind of thing……

        1. I tried putting eggbf in at Fido but it wanted a $50 foreign fee, so I put the order through Merrill instead.

          1. Westie and Irish – At first I thought you ruined my day with talk about $50 foreign trade fee at Fidelity…. At first I figured I’d just brag about not having them charge me. There was never any indication of a $50 fee when I filled in my buy order on EBBGF 4 times in 2 years and they in fact said no commission… Then I went back to view my actual confirmations and lo and behold they read “$50 charge for foreign (ordinary) stock orders included. THEN I looked even further and discovered that out of 4 buy orders only once was I actually charged a $50 fee. So I then called somebody and asked him to research. He discovered that because EBBGF is “transferable,” no fee was to charged. I didn’t ask him to explain further but essentially the answer was that EBBGF and probably almost all CAD issues are not supposed to be charged the $50. That doesn’t explain why it’s printed out on the confirm that it is, but bottom line, you should not be charged $50 fee for online purchase…. Westie, I don’t know how that applies for call-ins but even so, I suspect if your $86 includes $50 foreign stock fee, you should be able to get that taken off…. Incidentally, given my low confidence level in what I hear from first level phone jockeys overall, I did not request a refund of the one $50 amount I was charged… I’d hate to have him go deeper and end up charging me $150 for the 3 trades I wasn’t charged…. lol… I do believe he got this one right, but I chose to eat the one $50 charge that’s probably wrong.

            None of this explains why you can only buy EBBGF and not EBGEF or EBBNF.

        2. I picked up some enb.pf.v/ebgef today in my IBKR account. The trading was through TWS, commission is about 0.008/share. I don’t subscribe to TSX market data, just searched on tmx.com and submit a limit order at the last price, it was executed an hour or so later.

        3. Its kind of like the silliness in the US about moving to Hydrogen.

          The “gurus” in CA are proposing to mix hydrogen into the natural gas lines to reduce natural gas usage in appliances.

          Of course,

          – they don’t cite any work with real world appliances to show that it would work;

          -burning hydrogen doesn’t produce as much heat as as methane, so mixing in 10% hydrogen only nets a reduction of 3% methane (i.e. you have to burn more of the blend to get the same heat).

          -there have been several studies/pilot programs that show current NG pipelines/piping can’t hold hydrogen and it leaks (the molecules are MUCH smaller). Since hydrogen is about 40 times as potent a greenhouse gas as CO2, any “gain” from burning hydrogen would likely be overwhelmed by even tiny amounts of hydrogen leakage.

          -nobody in these studies/proposals talks about where we would get enough hydrogen to do this (most of the hydrogen used in things like the bus pilot programs in LA is derived from “stripping” natural gas, so no benefit, and hydrolysis requires more electricity, which we get from burning fossil fuels.

          So, Canada doesn’t have a monopoly on political nonsense.

          Oh, and by the way, our politicians put $Billions in the infrastructure and bail out bills to fund hydrogen…

          Your tax dollars at waste

            1. Thanks 2WR. Nice site.

              I have worked with Air Products off and on as a supplier to companies I have worked for/with in semiconductor and similar hi-tech manufacturing. AP is a good company with smart management.

              As I scanned the website you posted (unfortunately, on my phone), I see that they are spending a lot of money (billions) that seem to be based primarily on gov. subsidies. Much what they are doing looks to be “test bed” projects. We have worked on a lot of gov. subsidy projects over the years (not with AP, but with other tech companies) – great way to get “free” taxpayer money.

              The gov loves energy projects for subsidies. A few years ago, it was solar and wind projects – a few of which made economic sense, many (most) of which didn’t without big gov. subsidies. Before that, it was ethanol, which taxpayers are still paying for (to me, its unethical for a government to subsidize programs to make fuel from food when there are people in the world who are starving – but I digress).

              From the AP site, they are producing hydrogen primarily by stripping methane (natural gas is almost completely methane) and some by electrolysis. Both are expensive (as I posted earlier) and aren’t economical without huge gov. subsidies. It is nice that someone is doing technology development work, but it looks like we (taxpayers) are paying for a lot of it.

              I would love to see an “end to end” cost analysis of their projects so we could see how they stack up against current energy sources. I couldn’t find any numbers on the site.

              It looks like their carbon sequestration is coming from capturing the carbon as they are stripping the methane (as you strip the four hydrogen atoms from CH4, you end up with a carbon atom) . This sounds good, but adds more cost – which is fine if the gov. is paying for it (i.e. it is not an energy-product benefit). In other words, it looks good on a banner for “climate change” projects.

              That said, it looks like AP’s green hydrogen project is funded primarily by Saudi Arabia. https://www.nghc.com/ The Saudis, the Emirates and other middle eastern oil countries know that their oil income will decline over the next decades, so they are looking for projects that could help them transition to a “post-oil” economy. Again, some nice ideas, but not economical without huge gov. funding.

              Sorry for the long post – I am once again sitting in a waiting room trying to pass the time.

              1. No apologies for long and informative…. I appreciate your taking the time even if it was waiting room time…. I’ve been following APD for a few years now and am fascinated about the possibilities of hydrogen… APD seems to be the bluest of blue chip type companies who has made a gigantic commitment to hydrogen’s future without having to bet the farm to do so… I have nowhere near your understanding of what this all means, but I do have a small stake in APD based primarily upon what they’re doing in this field… AS far as this particular project, as you noticed, it’s the largest green hydrogen project in the world and is funded heavily by the Saudis in partnership.. Cost overruns and questionmarks about its future had been a headwind for APD as a company for a long time, but I suppose that;s now working its way through…. however, it is far from the only hydrogen project APD is investing in….. Is it all pie in the sky? I’m far from qualified to even theorize…. but you would think with hyrdogen being the third most abundant element on the planet, you would think that over time the costs and technology necessary to make it a viable energy alternative are going to eventually make it happen…. That’ll probably make my heirs very happy should they decide to hold on to APD….. Me? probably not so much……

                1. I used to own a LOT of APD. Bought it about 10 years ago and got out when I had tripled my money. Wish I had held another year or two.

                  Don’t get me wrong about hydrogen – I think hydrogen can have a huge place in our energy future – it just isn’t ready for prime time yet. Lots of problems to work out. They are all probably solvable in the long term, but the Biden administration is throwing money at it like it is ready to go today. One thing I know – if the government starts shoveling money, somebody will sign up to take it.

                  In fairness, the Obama administration did similar things with wind and solar, but the dollars were dramatically smaller.

                  I think government officials often (a) want to look like it is leading the way in “hip and trendy” issues (like alternative energy), so (b) they listen to lobbyists trying to get funding for projects that just aren’t ready, and (c) throw money at the projects/issues so they can look good. Doesn’t matter if the projects pan out (they won’t even be completed in this election cycle) or make economic sense (hey, its “free” government money…).

                  We have seen this from both parties over the years. It is just that current administration keeps tacking on afrightening number of zeroes to the amounts they (borrow) and spend…

                    1. Thanks. Neat company.

                      Zinc is old school being forward developed. The old style “pre-alkaline” batteries from your childhood were zinc based. Nice to see someone extending an old, safe technology.

                      I think it certainly makes more sense to use zinc (or lithium iron) in home or larger scale storage than to use lithium ion (like Tesla powerwall). Lithium ion is expensive and fire prone. Of course, that doesn’t stop the state of CA from funding huge (and premium priced) Tesla lithium ion storage facilities to help our idiot governor’s “green image”.

                      Personally, I can understand a $400M grant to a company trying to drive a technology forward where they have shown good results already. My concern with the H2 grants is that they are for multiple Billions to push toward production when they don’t have the basic issues solved.

                      Just my curmudgeonly way of thinking, I guess.

  17. Can someone please explain the pricing differential for Hawaii Electric prefs HAWLL and HAWLI?

    As I write this –
    HAWLL has 4.65% coupon shows last sale of 12.34, bid of 12.30 ask 12.80
    HAWLI has 4.75% coupon shows last sale of 11.05 , bid 10.75 ask 11.52

    Shouldn’t HAWLI be same or slightly more as HAWLL?
    It is consistently more than a buck cheaper. Why?

    1. I am going to guess that since both of those preferred, I think, have been around for 20 plus years that they are not exactly liquid. A lot of people do not know they exist, a lot of people don’t care, and then there are people like us who notice these things. The “us” part is probably a very tiny slice of the investing world. With the recent fires it sparked some sells and with the worries that exist buyers are not exactly comparing them very well as it takes a bit of effort to do that. Like knowing there are several different preferred outstanding from HE to start.

      1. That more or less sums it up from my perspective. They all are same standing and these 2 both have same $21 redemption value also (one of the series is $20). All HE preferreds are significantly older than 20 years. Most are 60-80 years old with tiny floats as low as a couple million. And to possibly skew it further many of the remaining shares could be controlled by HECO.
        As most companies arent so inclined to let a few million dollars of preferreds take majority voting control over a multi billion valued subsidiary company just because they missed a few quarterly dividends in times of stress.

  18. AQNA at first glance looks better than the ET ones. I like that it is a utility rather than an MLP in the energy sector. I will check it out further as it is a note rather than a preferred and I am not familiar with Algonquin Power. I am also not as familiar with notes, but I do own a couple. I do see they can redeem it after this October. I wonder how likely that it will be redeemed in the next few quarters?

    1. With a 42 cent interest payment a redemption is actually a very solid YTC. These are fake notes however. Most people know subordinated notes are preferreds masquerading as debt anyways. But AQN takes it to the level they arent hiding it. It company ever went into receivership the notes are automatically converted to preferred stock. So they are going to make sure your slim possibilities of pennies being recovered turn into dust. AQN is in initial process of becoming an entity that only owns regulated utilities. I actually some senior unsecured debt of one of their subsidiary utilities owned by Liberty which in turn is owned by AQN.

    2. dj
      Keep in mind that AQNA is Canadian and subject to the 20% witholding tax unless you have the appropriate form filed with your broker

      1. Westie, Have you had it withheld? This was a US issued “debt”. I have not had the experience of these ever having anything withheld before. Is my assumption here incorrect?

        1. Gridbird:
          When I went to sell some AQNA a while back, FIDO warned me that the sale was subject to Candadian witholding unless I completed the relevant form exempting me from the witholding as a US citizen subject to the joint treaty.
          I filled out the form and my rep said it was correct. I can look up the form # if you wish. Sold 100 today and received no warning.

          1. Westie, brokerages have their own rules, I guess. I have traded this before and never had that problem. But I dont have Fidelity. In fact the prospectus says as such… Interest on and disposition of the Notes
            Under the Tax Act, interest, principal and premium, if any, paid or credited, or deemed to be paid or credited, to a Non-Resident Holder on Notes will not be subject to Canadian non-resident withholding tax. No other taxes on income (including taxable capital gains) will be payable under the Tax Act in respect of the acquisition, holding, redemption or disposition of Notes, or the receipt of interest, premium or principal thereon by a Non-Resident Holder solely as a consequence of such acquisition, holding, redemption or disposition of Notes.
            Now….If these “notes” were converted to preferred shares from a bankruptcy then they noted they would be subject to the witholding. But I didnt buy under impression they would go bankrupt, lol.
            Interesting they badger you on the form, as I have never heard of a situation where foreign countries issuing US denominated debt on US exchange was subject to a foreign withholding. For example I also owned ENBA which was US issued debt from Enbridge and it never was subject to a Canadian withholding before it was redeemed.

            1. Gridbird and Westie…… IF I bought any AQNA it would be through my Vanguard brokerage accounts. I may call those birds and discuss the tax implications / form with them. Guess I will ask if anyone has had any experience with Vanguard and Canadian equities such as AQNA that pay a dividend. Right now if I buy any of AQNA with the proceeds from WFC-Q being called I may split the proceeds to spread out the risk some among several companies. They all can’t go bankrupt or screw you , right!?!? Guess I am feeling a little funky tonight. Just got back from visiting the Hudson River valley above West POint to visit my son. That drive up the Hudson River from the Newark airport is kind of hellish until the Palisades Parkway. Love the way New Jersey and New York do their road signs. They are terrible……. along with the traffic and airlines not being anywhere near on time!

              1. Dj, In 2 weeks I am heading on my first “driving vacation” in 20 years. Heading up to see Mackinaw Island then swing north and then down to Green Bay and Door County. Its like 12 hours one way up there. It may be our last! I think I would rather be stranded in an airport drinking, than riding in a car for forever. We will find out soon I guess.

                1. It’s going to be hard driving a car, not a golf ball, for 12 hours with your thumbs on the Buy/Sell button… I bet I can guess what hours will be GF’s shift……ha

                2. I recall you are in the Southwest? If so that road trip up through the Midwest to Wisconsin and Michigan will not be so bad as long as you avoid Chicago. The highways on the eastern seaboard are so congested driving is very stressful compared to the “old days”, when it was enjoyable to take a road trip.

                  1. Dj, Im from Missouri. So I guess it wont be so bad, I just like to complain, ha.
                    Dlc, I will bring a jacket and remind my lady, too!

                  1. Green, And yes, we are going to stop by and take a look at Lambeau Field, too! Here is a trivia question that will make your stomach churn. There have only been 3 head coaches that have had a winning record for the Washington Redskins since Eisenhower was president. One is Joe Gibbs from the Hogs era..Two is the Over The Hill Gang of George Allen….And three…The Man and the Legend….Your Number One Packer….Vince Lombardi…

                    1. Here is a Packer Trivia nugget – what is the link between Notre Dame Football and the Packers. Answer – A long time go there was a player at ND playing for Knute Rockne. The player got sick and was sent home to the Green Bay area to recover. Once home, he started working in a local packing plant to earn money to get back to ND. He never ended up going back to ND. Instead he started a pro team – the Green Bay Packers. The player … Curly Lambeau

                    2. Just, Curly also coached the Redskins. Many people forgot Lombardi came out of coaching retirement to coach Redskins in 1969. Led them to their first winning season in 14 years. But died of cancer before the next season began.

                3. Grid,
                  I take a 12 hour (each way) road trip with my wife at least once a year to see some of our kids/grandkids.

                  Great opportunity for her to talk about things on her mind, her worries, etc. I think she needs a big piece of uninterrupted time to talk. Helps me remember why I married her (I definitely married up). She has put up with a lot because I have been “on the road” so much for the 40 years we have been married.

                  That said, she sometimes wants us to listen to a good book (audio book), which is fine too. Audio books really make the time fly. I make the same trip at least once a year by myself (and I was doing it at least once a month before my parents passed) and I usually listen to audio books to help me stay awake.

                  1. The 550 mile drive from Reno to Salt Lake City is kind of relaxing. Very little traffic and I love the desert. In the middle, there is a great little bakery in Elko Nevada that makes Cornish Pasties (beef and cabbage is the best) and real Rhubarb pie.

                  2. Private you are going to laugh at this as this is the opposite… A couple days after getting back from that trip I will take off to a three day golf outing in Illinois with the golf group. We are already joking that she is thrilled I will be gone so she can have the house to herself for a few days after being around me 24-7 for a week, ha.

                4. Grid, Door County is known for their fish boils. However I highly recommend that you find a place that serves what is known in Wisconsin as a “fish fry” which is much better. It is fried perch, walleye or whitefish depending upon availability. Some restaurants/bars only serve them on Fridays.

                  1. Steve, I have heard about those fish boils. The only problem is neither of us eat fish or any seafood. So we may look, but not partake, ha.

          2. What???
            FIDO needs to hire better tax people.
            That 20% withholding on sale transactions applies in a very different context and not to debt instruments.

  19. Since WFC-Q is being called 9/15 I need to find another fairly short term home for the funds I have in it. These funds are out of my “higher risk” bucket so I am a little more aggressive with investing them. I have been looking at one of the Energy Transfer preferreds, specifically WT-C or ET-D. Looks like the Energy Transfer common dividend is covered well by its cash flow, but as typical of MLPs they pay out most of their earnings in the dividend. Their Debt to Asset ratio is high, about 116%, but they have been reducing it in the last few years. Their Debt to EBITDA ratio is 4.02 at the end of the June quarter, which has been coming down too. Looks like interest rates aren’t going down unless the economy finally breaks as Mr. Powell is ****bent on raising rates more. Thinking I might as well do another floating preferred. Seems like buying one of these preferreds can be considered risky enough for me, but what are others out there eyeing for re-investing their WFC-Q funds? Going safe with it or going out for risk some with a floating preferred?

    1. You may consider watching AQNA which goes floating (Libor plus 3.67%) after next exD of 9/30. Basically at par now and it pays out 42.9 cents end of Sept. before floating (starting 10/17 after payment). I have not seen their intentions of following new SOFR act of looking to pull a PennyMac yet…..Or even just redeeming… If they follow the SOFR+ it would edge the yield over 9% at present terms….They are looking to de-lever and jettison their renewables business to maintain their IG senior unsecured rating. So this fake debt may not be needed in due time. Keep in mind the fake debt pays interest not QDI. I just bought some of these around par recently.

      1. Grid:

        Have you checked the fine print in the offering docs for AQNA to see if you could get “Penny WHACKed” or “Morgan SLAMMed” on this one regarding their interpretation of LIBOR Act?

        1. Kid, that is why I mentioned Penny. Different companies can go off in different directions with basically same terminology. For example NS could have done this with NSS but didnt. The only redeeming thing to counter a negative outcome on adjustment is the fact its basically at 7% already even if it stayed fixed. So the yield is pretty much in line with BB+ debt that is going past call. Plus you have a company looking to strengthen their balance sheet not leverage it. A most impressive change of behavior coming from such a debt binge drinking entity such as AQN.

  20. HE up big today over their claim (now- and seemingly changed) that they had turned power OFF before the storm, etc. Huh? Maybe residents might have noticed and mentioned it?

    1. Lots of claims from lots of people. Hopefully it all gets sorted out in a fair manner.

      I have my doubts these days…..

  21. With PMT choosing transition the floaters to fixed rate stocks, what do y’all think the likelihood of this action spreading to other floaters? Many have similar wording in their prospectuses.

  22. Can anyone point to list of baby bonds organized by maturity date (III has by call date)? Want to structure a ladder that provides cash for required minimum distributions from retirement accounts in future years.

  23. Just a heads up to anyone who owned the old Atlas Financial notes AFHBL or the common stock. They seem close to a settlement agreement on a lawsuit which was filed and if the court approves there will be as much as $13 a share or so paid to people who owned the baby bonds.

    It is a very convoluted formula which is dependent on buy and sell dates, but I had some that come in around the $9 range. Unfortunately, I held them in a couple of retirement accounts so I dread seeing how to get that money back into those accounts without it being counted as a contribution. And to make matters worse, one of the accounts has since been moved to another broker and the old account closed so… I have no idea how that will play out. The only article I could find about such a situation mentioned the check would be made out to both me and the broker. Then I would endorse it and arrange with them how it would be counted. But that is out the window for a closed account I would imagine.

    What fun I am going to have…

    1. I got a notice in the mail about this class action settlement a couple of weeks ago, but after digging through my trading history it seems I’m not eligible because the AFHBL trades were made outside the date range cited. Not complaining though as the trades were profitable…mostly luck, but the cigar butt had a few good puffs left on it. 😉



    I took a look at the NEWT filings. They give the formula for coverage as: “The ratio of our total assets (less total liabilities other than indebtedness represented by senior securities) to our total indebtedness represented by senior securities plus preferred stock, if any, must be at least 150%”

    As you know, they claim 169% coverage in their 2022 10-K based on “$546.5 million of aggregate principal amount of senior securities”.
    I did my own calculation based on the 2022 10-K balance sheet and get 167%. So, all seems in order.

    (Total assets – (Total liabilities – Indebtedness)) / Indebtedness
    (998.9M – ( 623.5M – 546.5M)) / 546.5M = 1.67 or 167%

    NEWT becomes a bank in January, 2023 and expands its balance sheet. I then do the same calculation on the 2023 Q2 10-Q and get 131%:

    (1439.1M – ( 1218.4M – 697.4M)) / 697.4M = 1.31 or 131%

    In the 2023 Q2 10-Q, NEWT does not give their own coverage number, but does claim to be in compliance with the 150% requirement.

    So, something is amiss. And now they are adding an additional $35M of debt with the new baby bond.

    1. Thanks for doing this work, Jay…..Yes, it appears as though something is amiss, but I dare you to get a straight answer on this topic from the Company in order to clear up what it is…..Nobody else has been able to.

      There are possible explanations, such as some of the borrowings may be exempt from the calculation on the debt side but who knows? I know the BDC Saratoga [SAR], for example, has a ton of debt that they outline as being exempt, but they at least state so in their docs. But good luck pinning down NEWT for explanation… Good luck getting them to specifically tell you “Our current asset coverage ratio as required by the 1940 Act is 150+X and we, therefore, are in compliance with this specific covenant.” Read the last 2 quarterly CCs and see how the issue is skirted everytime it’s brought up. With them being so forthcoming with answers when it comes to anyone/any analyst asking questions on the equity side, this just stands out as being purposely evasive in comparison….. It just makes me feel as though they, guided by attorneys, have come up with a way to work around the ratio covenant and they know that their approach to how they are doing it, although legal, would be distasteful to existing creditors who believe they can rely on what they feel is strong written in asset coverage ratio protection under the Act, so they are are unwilling to voluntarily disclose what they are doing….. If not something along these lines, then why do they no longer publish their current asset coverage ratio in the past 2 quarters as they have historically up until year end ’22? Why are they so unwilling to answer questions? All this makes me greatly appreciate August West’s recent cogent post, “When making decisions about Fixed Income securities I always keep Character, Credit, Cash, Collateral, Covenants in mind. To me the most important of these is Character.” Overall, I admire NEWT and I remain an owner of not only the 2 notes, but equity as well. However, this ongoing purposeful vagueness is creating a stain.

      1. 2WR,
        In the 424B2 for the coming new baby bond, NEWT spends time defining in good detail what senior securities are (and what is not a senior security). So it is possible that all the “Notes Payable”, which were clearly part of the senior-securities total in the 2022 10K calculation, have been dropped from the calculation now in order to make the coverage ratio work.

        The newer, narrow definition may actually be more correct, but it is hard to say that out loud because they are being inconsistent and using it to their advantage.

        If you use their new definition, the current asset-coverage ratio, including the new baby bond, is 192%.

        1. “If you use their new definition, the current asset-coverage ratio, including the new baby bond, is 192%,” which, if accurate, one would think they’d be crowing about instead of deflecting, wouldn’t you? Thanks again for your work… I’m completing reading the new one as we speak…..

    2. Hi Jay – I don’t track this name, but isn’t this the calculation (based on balance sheet as of end of Q2)?

      Sr Debt = $233,250 (2024, 2025, 2025 and 2026 notes)
      Numerator = Total Assets – Total Liabilities + Sr Debt
      $1,250,000 – $1,030,000 + $233,250 = $453,250
      Denominator = Sr Debt

      Ratio = $453,250/$233,250 = 1.94

      This makes sense to me because the debt associated with the securitizations (the various SIVs and other structures noted in the 10Q) should be netted against the associated assets and should not count in this ratio (IMO).

      If they had subordinated debt and preferred stock it would have to go into the denominator.

      1. August West,

        Your calculation is correct. The issue is that that is *not* the way NEWT was defining ‘senior debt’ prior to 2023. Prior to 2023, the debt included Notes Payables. This is explicitly noted in NEWT’s 2022 10K, which says that 546.5M in senior debt produced a 169% coverage ratio. (The only way to get to 546.5 is to add Notes Payable to the baby bonds total). Please see my earlier response to 2WR. It seems that NEWT has changed the way they do the calculation, to their own advantage, in order to keep themselves within the coverage ratio, but are not saying this out loud. So it has created mistrust for baby-bond-holders who are trying to track the protection they think they have in the requirements of the ratio.

        1. I thought you said this was a simple calculation lol

          I think what they may be doing is keeping 2 sets of books. They had to change basis of accounting to BHC standards and wrote down like $150mm of assets. But for the purposes of the covenants, they might still be using the RIC basis of accounting. Not clear to me how legally defensible this is.

          1. To add more mud to the scenario, I don’t think it’s entirely clear who might have the ability to legally question what’s being done.

        2. I hate to be obsessed by all this NEWT stuff, but I guess I am so here’s a bit more…. This new prospectus just adds to reasons to be concerned about whether or not NEWT considers the 1940 Act protection for Z and L to still be consequential. Not only is there no mention of the special, stronger protection afforded Z and L anywhere in this prospectus but more than once they state, “The amount of notes the Company can issue under the Indenture is unlimited.” (p s7). Although that is probably true under the new Indenture alone, you would think that a statement like that ought to be qualified by saying something like, “however, as previously stated in our most recent 10k, because of the language in the documents governing two of our outstanding notes, NEWTZ and NEWTL, the ratio of our total assets (less total liabilities other than indebtedness represented by senior securities) to our total indebtedness represented by senior securities plus preferred stock, if any, must continue to be at least 150%. Were we to redeem Z and L we would no longer be subject to the above requirement.”

          Not even acknowledging this limitation when emphasizing their ability to theoretically pile on unlimited amounts of debt under the new Indenture just opens the door to questioning whether or not NEWT still considers being “in compliance” the equivalent to adhering to Z and L’s asset coverage ratio limitations.

        3. Hi Jay,

          I went back to look at it see your point. Is the debt that appears to be excluded issued by an SBIC subsidiary? Googling around I am seeing that they might be able to exempt such debt from asset coverage calculations.
          Please see slide 13 of this deck.


          1. August West,
            The slide deck is interesting, but I think the point regarding NEWT is simply another: The method that NEWT itself used to calculate the ratio in the 2022 10K, if used in the 2023 Q2 10Q, would show that NEWT is in violation of the asset-coverage requirement. Yet they claim to *not* be in violation. And they don’t (won’t?) explain why. Go back and read the CC transcripts that 2WR referenced. You see him valiantly questioning the execs about this, to no avail.

            1. Thanks Jay! All I can say is good luck all that to you and 2WR! I does not look like something that I am going to be interested in.

  25. LEGAL…Maui County files lawsuit against Hawaiian Electric blaming them for negligence in the recent destructive fires at Lahaina.

    1. HE announced suspension of dividends (not a surprise). It is also drawing down its credit lines. It is trading off during after hours trading.

      Discussion on Bloomberg Law tonight about lawyers using an obscure legal doctrine that could make it easier to sue Hawaiian Electric and win. Untested in Hawaii, but it is the same doctrine that sunk the California utilities. The laws in both states are similar. There was no discussion as to whether insurance would cover court awards vs more standard legal theories.

      The doctrine exists in 27 states and was recently re-discovered by trial lawyers. IMHO, its use could create added risks for publicly traded utilities.


        1. Inverse condemnation. Basically, if the government takes your property, say for a road widening, they have to pay you for it. (Condemnation or eminent domain.)

          The legal argument in Hawaii is – States have delegated some governmental powers to utilities. So if the utility causes you damage, it is acting like a government doing a “taking” and you ought to be able to recover your losses. It is something of a legal shortcut.

          Whether it works or nor depends on the wording of local laws which vary from state to state. It worked in California and Hawaii and many states have similar wording in their laws. Obviously, its more complicated than my summary, so check Google or ask your favorite AI site. There are some current articles around.

          Just my opinion. DYODD

          1. The important thing is that (as interpreted in California), the utility doesn’t have to be shown to have been “negligent”. Only have to show that their equipment caused the damage – kind of a “strict liability” concept.

            Its really about who should carry the risk of loss when the utility’s equipment causes damage but negligence can’t be proven. this legal construct says it is the utility. the alternative is that if negligence can’t be shown, the injured parties take the loss. Sounds harsh on utilities – and they all carry huge insurance because of it – but the only one who can really reduce the risk is the utility (cut trees, replace equipment before it fails, insulate lines or bury them, etc.

            In CA, I look at San Diego Power, then SoCal Edison as the leaders in this.

            Funny side note – lots of investment analyst-types keep screaming for utilities to bury lines, which costs millions of dollars per mile, while insulating the lines costs about 15% as much as burying. Some lines should certainly be buried, but most will be fine if they are just insulated.

            most people are surprised to find out that those big power lines you see are bare conductors, not insulated like the lines running through your neighborhood and into your house.

        2. Things seem slow here today, so here’s a link to the Bloomberg News article on inverse condemnation, reprinted in full in a Spokane newspaper. No Bloomberg subscription required.

          Maui fire victims pursue legal tactic that led to $13.5 billion California settlement

          FYI, The Wall Street Journal has some coverage about the flammable non-native grasses that the abandoned sugar plantations are now overgrown with. A known hazard but $$$ to fix. WSJ front page, subscription may be required.

          Bloomberg Radio had a short segment on reinsurers pulling out of markets like California and Florida. Surprising comment: one of the causes of the Florida pull outs was massive claims fraud. Apparently insurers and reinsurers can model better for increasing natural disasters than they can for trial lawyers.. “Florida accounts for only 9 percent of the country’s home insurance claims but 79 percent of its home insurance lawsuits, many of them fraudulent.” – Bank Rate

          Long: insurance and re-ins. Just my opinion. DYODD.

          1. The info about Florida is somewhat outdated…Fla. legislature passed tough new laws that make it very difficult to sue the insurers (unfortunately getting legit people caught in the same net as the scammers) but the insurers are STILL pulling out because the business model doesn’t work in a state where very expensive natural disasters (hurricanes) are a constant threat that has grown worse and worse. (Not all of the companies acknowledge this is why they’ve pulled out.)

    2. Hi Newbie,

      Reading through Barron’s I noted an article on HE – S&P downgraded them from BB- to B- (that is quite a downgrade), and evidently they have drawn $375m on their credit lines and that has tapped out these lines.

      “S&P noted that the group has essentially fully drawn on its $375 million consolidated revolving credit facilities and likely faces inconsistent access to capital markets which are fundamental to its long term success. “

    1. At first I was afraid, I was petrified
      Kept thinking I could never live without you by my side
      But then I spent so many nights thinking how you did me wrong
      And I grew strong
      And I learned how to get along
      And so you’re back
      From fund evaluations nearing outer space.
      I just walked in to find participants here with sad looks upon your face
      I should have changed that stupid lock, I should have made you leave your key
      If I’d known for just one second you’d be back to bother me
      Go on now, go, walk out the door
      Just turn around now redeem if you can
      ‘Cause you’re not welcome anymore
      Weren’t you the one who tried to hurt me with goodbye?
      You think I’d crumble?
      You think I’d lay down and die?
      Oh no, not I, I will survive
      Oh, as long as I know how to provide 5 year lock up and collect fees, I know I’ll stay alive
      I’ve got all my life to live
      And I’ve got all my love to give and I’ll survive
      I will survive, hey, hey

    2. Thanks for posting Gary. Where there is smoke there is fire. If a contagion breaks out in some of these insurers that Private Equity owns it can cause fear to spread to even the independent insurers.
      I remember the home loans going around prior to 2007 I think there were interest only loans then too. It’s crazy to think lenders were doing the same thing these past few years with commercial real estate loans.
      PE can’t refinance these loans at higher rates and make the numbers work so they are just handing the lenders the keys and walking.

  26. Anyone heard from Azureblue recently?
    I saw one of his posts (from April) recently and it occurred to me that I haven’t seen him post in several months. I always appreciate his posts.

    It is possible I am just missing them (I miss a lot of posts). Hope he has just been enjoying a nice summer somewhere.

    1. No Private he’s been missing in action for a while now. I was thinking of going back through the postings here and try to find his twitter account , excuse me his X account and trying to contact him. I miss his insight like his comments on the timber business.

      1. Same question on Tex the 2nd. He posted in July but hasn’t lately. I miss his valuable input.

          1. That’s a good flip! I’m holding (REGCO) for the 6.49% yield and the prospect of of redemption.

            Appears recent nonsense with pfds being dragged into darkness by malfeasants kept the pricing on this issue down in sympathy, though it’s one of the cleanest, transparent and above-board mergers this year in pfd-land.

            IG meets high quality unrated. Perfect setup.

  27. I know that the velocity of money is regarded as arcane and academic but I have seen no mention of it in years. The velocity of M2 has dropped in half from 2000 to 2020 but in the last 12 months, it increased about ten percent. It would seem reasonable for the velocity of money to increase as rates increase. The point would seem to me that in this new era of QT, the velocity changes may be greater in impact than the decline in money supply. This could explain the unexpected growth in GDP?


  28. Idle curiosity question:

    EMP closed yesterday at $21.39

    At 7:01:47 this morning, 400 shares of EMP printed at $20.69 on ARCA with the NBBO quote at $18.64 x $24.45.

    I would assume that this was a fat fingered trade. Is there another reason that might explain this?

  29. After a particularly bad financial crisis in 1907, the result of bad banking policies first imposed during the Civil War, major Wall Street banks decided to promote the creation of a new central bank that could be depended on to bail them out during a financial crisis.
    The Wall Street bankers and their allied politicians understood that it would be difficult to get the American public to create such a powerful and dangerous government tool. In planning the creation of this new bank, they met in secret locations—like Jekyll Island, Georgia—using fake names. They plotted a national propaganda campaign to sell the public and elected officials on the plan by any means necessary.
    In 1912, Woodrow Wilson was elected president in a three-way race with less than 42 percent of the vote.
    A year later, he would sign into law the creation of the Federal Reserve.

  30. 2yr Treasury broke thru the 5% resistance level…now 5.04%…let’s see if FED talk at Jackson Hole spooks it to higher levels.

  31. Tim mentioned looking at REITS again.
    Any thoughts on Spirit Realty? And specifically SRC/A which is trading right around 21.50 which is a 52 week low. Yielding just a hair under 7%. Split Investment grade. Seems fairly solid. Big box store and Dollar store type tenants.

    1. I don’t follow Spirit, but I took a look. I didn’t see any fundamental issues with the preferred. Things I found interesting about the company.

      – They are a net lease REIT
      – ~2,100+ properties
      – Diversified rent base, mostly retail (68%) and non-retail (32%)
      – Distribution segment (non-retail) is about 11 .2% of rent
      – Heath and fitness segment (retail) is 7.8% of rent
      – Largest single retail tenant is about 4.2% of rent;
      – Lease expirations look good up through 2026
      – Average remaining lease term, 10.4 yrs
      – Biggest geographic exposure is Texas at 14%
      – Interest payments went up 10% 2022 vs 2021
      – Debt maturities jump in 2025 with balloons due
      – Fairly unique use of master leases, 40% of rent
      – The common dividend was steady through the pandemic.
      – They just raised their dividend, regarded as a good sign

      There is a Form 10-K for the fiscal year ended December 31, 2022 on their website.

      Just my opinion. DYODD.

      1. Excellent summary on Spirit, Bear
        I looked also, and found these two following points the most compelling positives:

        Spirit needs just 2% of its AFFO to cover the preferred dividend.
        In a stress test scenario, an overnight doubling of the cost of its debt to 6.75% would reduce the AFFO by just 25%.

    2. You mean you’re not interested in MPW, the darling of the high yield crowd on SA? LOL…it’s a train wreck still in progress yet SA bulls keep pumping it to high heaven.

    3. SRC/A trades at a very low volume and has performed worse than the underlying common shares over the past year. If you like the company and its prospects, why not buy the common shares instead?

  32. Mortgage Rates…Climbing Higher

    30yr Fixed…7.48%
    30yr Jumbo..7.40%
    5/1 ARM……7.24%
    15yr Fixed…6.88%



    10yr Treasury…4.31%

  33. AGM-E has been taking a significant hit lately. Trading has always been somewhat sparse and erratic though. Aside from long term rates bubbling up, is there any relevant news? I have been scanning but don’t see anything. Thanks!

    1. Proto 123; For whatever it may be worth to you I own a ton of AGM+E. I have spoked to their IR MGR. on several occasions. She has told me they continue to do great and it wasn’t too long ago that they had a record setting quarter. We had a really nice long talk and she told me something I actually knew. A farmer will do anything he can to never lose his farm. Afteral its his LIFEBLOOD. Without that farm he has no job. I would “suspect” its just everything in the market and all kinds of issues coming out with really high coupons from companies you would recognize. For example a few weeks ago I bought a new WFC bond with a 7.625% coupon. So lots of “competition” for fixed income these days. Spoken not spoked. I need a spell checker–LOL

      1. Thanks Chuck for the feedback. I had heard AGM was strong but their price volatility seemed to be increasing. It is one of my “sock drawer” issues so I intend to hold regardless.

  34. What do ya do during the heat spell when you retire??
    It’s that time of year to do a financial overview while there is still time in the calendar year to make adjustments for 2023:
    – Most of us still have time before RMD which was increased to age 72.
    – If you have IRA assets and are NOT earning income perhaps a Roth recharacterization or a series of planned recharacterizations, before RMDs kick in, makes sense? It MAY even make sense to take a year off from earning to do a larger conversion…and give you a retirement pre-trial?! Must be completed by Dec 31 for that year credit.
    – The self employed have a very large contribution allowances and write-off provisions. Maybe ask for a shift to an independent contractor status, esp if you do not need the insurance (spousal plan or post Medicare).
    – Using 2022 tax charts and RMD min. mandatory req. withdrawal factor at age 72, I discovered that if one of us was to be >EXPIRED>> by the time RMDs roll around, the tax on the <<SINGLE< spouse left alive would be an over a doubling of tax.
    – Renaming to younger beneficiaries, simple and easy one page tax shifting, can be a valuable tool too if the family involved have a high trust relationship (much lower factor).

    Just a reminder that there are many planning tools available and the window may close at any time. Start earlier than you think (NOW!). Use and pay for a qualified Tax planner SPECIALIST (not me!), not a broker or phone associate. Understand all the details fully before you expedite anything.
    Good Skill and take the Luck too! JA

    1. A major benefit to the self-employed: set up a defined benefit retirement plan. Many brokerages have canned plans.
      You have to pay yourself a salary at a rate an actuary determines that will maximize benefit (roughly the salary you paid yourself) when you retire. Then you set aside in the DB account, tax-free as a business expense, the amount the actuary says you need to maintain similar income in retirement. It compounds until then.
      I put away a lot of money this way and saved a lot of taxes. Rolled it into IRA when retired.

      1. What is the advantage of the defined benefit plan over a Solo 401(k)?

        And are people still excited about tax deferred plans? I thought for most people the tax savings have turned out to be a mirage.

    2. Thanks! Yeah, I will hit 64 in September and will retire on Jan 12th. A decent pension from NASA awaits and income on my investments. Still toying about when to start taking SS but, the hunch in me says take it earlier, maybe next year as well. I’d rather have control of that money than let the gov’t keep it all for too long. Since I have paid max into SS for years, I would get about $40K/year should I start next year…we shall see.

      RMD seems a long way off being 8 years out but, nevertheless, the planning and tweaking commences. As deciding whether to convert regular IRA funds to Roth. This can be more complex than my rocket science work, I tell you!

      1. If you’re doing it right the years go faster the older you get. Those eight will go by quicker than you’ll expect them to. Unlike rocket science there are hardly any unequivocally right-stuff answers in planning for retirement. Seems it is mostly just a constantly shifting mess of squishy what-ifs and variables we have no way of knowing what the correct values should be set to going forward. Then there is the endless supply of jokers on one side and clowns on the other. Beware ‘analysts’ bearing pleasing scenarios that are based upon rosey discounted cash flow (DCF) assumptions. These days many Americans don’t yet seem to realize it, but, they’ll never get to retire in the classic sense. In fact, in a cruel cosmic joke, the more money you have the less free time you’ll have left over to savor after the busywork of shepherding your assets chews through your waking hours. So think about ways to weave the task into your lifestyle so it doesn’t become a burden and wear you down as you get past your sell-by-date. Remember too your brain thinks you are ten years younger than you really are, so, do a hard-nosed unflinching reality check and consider the appropriateness of large outlays or major changes before taking a leap. Of course, as always, the cosmic joke/contradiction kicks in, so don’t take to long to decide cuz you never know when your ability to pull if off may slip away from you. May as learn to enjoy it, take it seriously, and stick with it, your new career managing finances that is. Good luck.

        PS. Do not take the SS early. The math is not rocket science. The return you get from waiting is like having a massive riskless bond portfolio that adjusts for inflation that you never have to manage. In the ZIRP days that was about the sweetest deal a citizen could ever have hoped to receive. Personally, I strongly suspect contrary to the current extrapolation rage around the latest blip in long term interest rates, that ZIRP is never going to be far from the minds of Central Bankers and power mad Pols. Remember, JPOW & Co & Friends even crossed the junk-bond buying Rubicon. I think they’re turning Japanese. https://www.youtube.com/watch?v=7tbobaz8nn4 The only way I’d say otherwise about putting off collecting your well-deserved SS is if the US gets very close to about 2030 without dealing with the solvency issue. So don’t panic, check the emotions, and remember we, the little people, have no special insight cuz “nobody knows nuth’in!” in these matters. Anyone that tells you otherwise is just another Jim Cramer clone. So be “data-dependent” (meaning either, FED-speak for “weathervane”, or, https://www.youtube.com/watch?v=EB3X6oZ1Ayo ), cuz it will be a slooooow-mooooooving train wreck leaving you plenty of time to adjust in a manner that maximizes your benes.

        1. If the Social Security claiming math is so easy, why do so many articles get it wrong? Leaving that aside, it comes down to knowing how long you are going to live, and not many can predict that.

          Here is the best claiming calculator I have found – but it relies on some fairly murky assumptions:


          1. I once did believe social security was “riskless”. But not in today’s political environment. For me the political risk is just too high. And with the trust being short capital in the next 10 years, I would not be surprised if Congress adds a means test for SS recipients – perhaps reducing payouts based on history of income or on certain held asset classes. Not unlike Medicare which does a two year look back on your adjusted taxable income to apply IRMAA. So at FRA – full retirement age – I began taking SS payments, do some part-time consulting (keeps mind engaged) and leave my retirement funds alone and invested.

      2. Taking SS early was a no-brainer for me. Retired with no earned income and a big chunk of my money in IRA / Roth IRA. Let it grow at 5-8% taxfree or draw on it earlier to earn higher SS later, if I lived to be 120 I might break even. Future economic uncertainty is also a factor against waiting.
        Did some Roth conversions from the low tax brackets I wouldn’t do it for higher tax.

    3. You are talking about Roth conversion, not recharacterization (which no longer exists).

      And where do you find a qualified tax planner? I have never found anyone who knows even as much about these topics as I do, which is not much.

      1. Hi David,
        I know you weren’t asking me, but I thought I would chime in –

        We do roth conversions in years we have managed our income low enough to have some “head room” in the tax bracket.

        That is my big issue going into retirement – I have WAY too much of my money in IRAs and in foreign activities I want to repatriate. I have been elated that the RMD age keeps rising…

        I still stubbornly do almost of my own US tax work (I won’t do overseas taxes). I look forward to the day I only have to do US taxes.

        I have found good tax people (for friends and family) by talking to people who own small businesses – they usually have a tax guy who handles both their personal and business taxes. Not all are good (I have met my share of idiots), but I like to think I can spot them early), but some have been very good (as in I call them to discuss questions I run into).
        I also have a fiduciary investment manager who handles part of my portfolio and he has recommended several tax people (for my colleagues) who have turned out pretty well.

        I find corporate tax people through TEI (tax executive institute – not sure it is open to the public) and through some of the firms we have worked with for clients.

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