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.

1,500 thoughts on “Sandbox Page”

  1. Late on Friday, I took an enormous bite (by the standards of my meager portfolio) of MITT-B. Even if the price drops further, I will be happy with an 11% yield, so long as MITT doesn’t suspend dividends and then go bankrupt. For reference, MITT-A is only yielding 10.25%, with the exact same risk as far as I can see.

  2. My thoughts Shep,
    I saw an Youtube video put on by a Australian team on how to tell if a Swiss Gram gold bar was fake. Lot of stuff coming out of China.
    I think it was Andrew Hecht over on SA mentioned in one of his jobs he had to inventory gold bars in a vault and they came across Swiss bars that were pure gold, but had fake serial numbers. There is a black market of gold coming from China being shipped to London by Brokers.
    The shows AB mentioned, if I was going I would look for vendors who are local so I would be able to continue to do business with them and build up a relationship with.
    GLTA

    1. Pretty hard to fake the stated weight on a rectangle with dimensions matching official measurements. A good reason to buy locally, or from a very trusted source.

  3. Oh Boy,
    Sad. My wife was just reading on MSN that the CFO of Bed Bath and Byond just committed suicide. Says he sold a million dollars of his own stock on Aug. 15th now this.
    Next 3 to 6 months may be interesting. The Tech companies here in the bay area have been looking at sub-letting office space. Starting to see tech layoffs. Not sure how this will affect the REITS, Medical construction may be slowing down. One of my customer’s said a few projects he has bid on are being pushed back on start date.

    1. Hard for us normal people to understand a very wealthy person killing himself because he is a little less rich.
      If this were a tv show you’d know it was murder staged to look like suicide. Because there’s 50 minutes left in the hour it can’t be over already.

    2. Charles:

      The U.S. office market is obviously going through some very rough times that may certainly end up being secular in nature. Check out any of the horrendous office REIT charts and they almost all look like tech stocks back in 2001-2002.

      Here is what the CEO of Equity Commonwealth (which has $2.7B in cash and is trying to sell their last 4 office properties) said back in early August, as the major banks have essentially given up on the sector:

      “Turning to dispositions. On our last call, we announced that we had 2 properties in the market, 1250 H Street in Washington, D.C. and Bridgepoint Square in suburban Austin and that it was likely that we would soon market Capital Tower in Downtown Austin, which we did. While there was interest in each of the properties, to date, we have not seen pricing in terms sufficient to warrant a sale. Since our last call, pricing of office properties has been impacted by several factors, including a significant change in the debt markets.

      Earlier this year, lenders were active and a buyer could borrow at a 65% to 70% LTV at an all-in rate in the high 3% to low 4% range. Today, the credit marks — credit markets for value-add office properties are essentially frozen. Recently, debt funds have been the primary source for loans. With LTVs around 50% and all-in rates in the 6% to 7% range, borrowing activity has slowed considerably.

      Moreover, given the uncertain headwinds in this remote work environment, many traditional office buyers hit the pause button. Those that remain active are seeking higher returns with more conservative underwriting. While we may still find a buyer at an acceptable price, these are good properties and we’re comfortable holding them longer.”

      1. Rob,
        I have driven by the Apple spaceship several times in the last couple years. Last time about 2 months ago. Had a decent priced hotel room right across the street. Was able to find a lot of available parking at the SB for coffee and my go to store 99 Ranch. Other side of the 280 on Wolf rd plenty of for rent signs for newly finished. apts. This area will come back, but I enjoyed not having to fight the traffic like years past.
        Commercial REITS have taken a hit and like the baby being thrown out with the bathwater there are some doing good. I’ll take this as a hint to look again at grocery anchored REITS
        Any suggestions for ones that might have a preferred outstanding ?

        1. Charles – why of course, the wonderful people at WHLR have preferreds outstanding…. They are known for their love of their preferred holders… ha! Why they love them so much they’ve brought the preferred shareholders of CDR into their world of preferred screwing…..

          1. Dane Bowler’s March 15th article didn’t mince words and I see Rida pumped out several positive reviews

  4. Interesting comment on SA I found today. Refers to the new model they are using to increase revenue. I have to agree, Authors paid subscriptions need to add value to make it worth it. Personally, It’s hard to winnow the wheat from the chaff. Even professional financial advisors like GS some like 50/50 on their advice. Great to hit a homerun on a stock that is written up, but long term how does these authors do with recommendations?
    From the comment page of a article
    “@wxflurry EmVee is going monetize here, wx, just a question of how much and how long it remains free. EmVee gets a larger share of the revenue as the creator of the content…. savvy… It’s the new model.”
    Authors reply:
    @wxflurry EmVee is going monetize here, wx, just a question of how much and how long it remains free. EmVee gets a larger share of the revenue as the creator of the content…. savvy… It’s the new model.
    Seems like they are going to be more aggressive about putting articles behind a paywall.
    Maybe they are reaching Alpha on the number of paid subscribers 🙂

    1. My cut and paste didn’t take I see,
      Should of Read
      Author’s reply
      @wxflurry – the articles will only be for subscribers. I will continue to publish some on the free site from time to time also, but if people are going to pay for a service, I need to make it worth their while.

  5. I was in Chase today dealing with the bank manager on my account. Her husband works internet security for numerous companies. As she said, who knows how it happened. Scammers work 8 hours a day trying to steal money.

  6. COWNL
    Has anybody looked into the terms of the agreement by Toronto-Dominion Bank to acquire COWN and how they will impact COWNL? The relevant language I believe is on p55, Section 6.13 of AGREEMENT AND PLAN OF MERGER
    by and among
    COWEN INC.,
    THE TORONTO-DOMINION BANK,
    and
    CRIMSON HOLDINGS ACQUISITION CO.
    https://www.sec.gov/Archives/edgar/data/0001466538/000095015722000833/ex2-1.htm

    Do you think this leaves wiggle room for COWNL NOT to be called on The Effective Date? This deal was initiated by TD, not COWN, so I think it’s highLY likely to go thru. Their timetable seems aggressive for a 1st quarter 2023 close, but assuming high likelihood of an ability to close, COWNL now at 25.12 [Ooops! now 25.26 before I finished writing] after having just gone ex-div seems attractive for a money parking idea…

    Here’s some of the language: “Treatment of Company Indebtedness and Other Securities. At Parent’s written request and at Parent’s sole expense, Company shall reasonably cooperate with, and provide reasonable assistance to, Parent in connection with any steps Parent may determine are necessary or desirable to take to retire, repay, defease, repurchase, redeem, satisfy and discharge, cancel or otherwise terminate effective at or after the Effective Time, some or all amounts outstanding under (i) the Credit Agreement, (ii) the Indenture, (iii) the Note Purchase Agreement [NOTE PURCHASE AGREEMENT = COWNL] and (iv) any other indebtedness of Company or its Subsidiaries (including any indebtedness that replaces the foregoing), which cooperation and assistance shall include (A) arranging for (1) the optional redemption, satisfaction and discharge, defeasance, exchange or other repurchase by Parent, any of Parent’s Subsidiaries, Company or any Company Subsidiary of, or a tender offer by Parent, any of Parent’s Subsidiaries, Company or any Company Subsidiary for, some or all of the notes issued pursuant to the Indenture or Note Purchase Agreement

  7. I am interested in how this merger might impact the existing WHLRD perferred. The suspended dividends on that issue a long time ago.

  8. Is there a method to the madness of fixed to floats? The premise was simple:

    -All $25 face fixed to float preferreds/baby/terms that had their first float date <= 7/1/23
    -Must be currently paying dividends/interest, so as to eliminate the non-payers
    -All issues use 3 month libor (3ML) for their base
    -All of these issues are either already floating or will be shortly
    -Do NOT consider yield to call, so the assumption is that these issues WILL not be called, just for the purpose of this study. That might not be the case in the real world, like the debate on PNC-P
    -Since all of the issues are currently paying, you would think issues with higher spreads aka margins to the 3ML would be trading at higher prices?
    -So an issue with a 6.5% spread should have a current price much higher than one with a 3.5% spread
    -100% WRONG!!!, not what the data shows
    =Correlation of margin versus today’s (8/31) close is -0.02, which means that is NO relationship between the two. Stated differently, other factors, like credit worthiness dominate pricing/yields.

    Ticker, float date, float margin, 8/31/22 close price

    NS-C, 12/15/22, 6.88%, 24.3
    NS-A, 12/15/21, 6.77%, 23.17
    NSS, 1/15/18, 6.73%, 24.85
    VIASP, 4/15/22, 6.58%, 24.9
    GLOP-B, 3/15/23, 5.84%, 25.2
    NS-B, 6/15/22, 5.64%, 21.06
    CUBI-E, 6/15/21, 5.14%, 25.3493
    AGNCN, 10/15/22, 5.11%, 24.39
    NLY-F, 9/30/22, 4.99%, 24.11
    DCP-B, 6/15/23, 4.92%, 24.95
    CUBI-F, 12/15/21, 4.76%, 25.23
    ET-C, 5/15/23, 4.53%, 21.8
    ZIONO, 3/15/23, 4.24%, 25.2
    NLY-G, 3/31/23, 4.17%, 22.44
    PNC-P, 5/1/22, 4.07%, 25.22
    RJF-A, 4/1/23, 3.99%, 25.54
    GS-J, 5/10/23, 3.64%, 24.48
    ENBA, 4/15/23, 3.59%, 24.56
    VLYPO, 6/30/22, 3.58%, 23.66
    SNV-D, 6/21/23, 3.35%, 23.9
    ALL-B, 1/15/23, 3.17%, 24.09

    There has been some debate about whether NS will call NS-A,B,C,NSS which are all callable by 12/15/22. Obviously if they do NOT call them and NS, which is not exactly a strong MLP keeps paying, these are all desirable issues. Also obviously the reason they had to pay such high margins over 3ML IS because they have marginal credit worthiness, aka there are not free lunches.

    If credit worthiness was NOT an issue, you might just buy all of the issues trading under par, starting with the highest spreads. So even if the issue was called, you would not take a capital loss. But the data tells me that is a DANGEROUS strategy.

    This is an example of “failed” study that I would not normally post, but decided too since fixed to float has been an active topic. We have not traded any issue on this list in at least the last month in any account.

  9. Decided to open the vault door and buy/add to some of my notes and preferred holdings today (I aggressively bought some physical precious metals too):
    3115 shares of SI-PA Silvergate Capital Corporation
    2000 shares of AEL-PB American Equity Investment Life Holding Company
    1330 shares of OXLCN Oxford Lane Capital Corp., 7.125% Term Preferred Series 06/30/2029
    3320 shares of RILYO B. Riley Financial, 6.75% Senior Notes Due 5/31/2024
    1000 shares of NEWTL Newtek Business Services Corp., 5.75% Notes Due 8/1/2024
    PLEASE do your own deep due diligence, these securities can and will LOSS MONEY. I know nothing more then you do, just filling in the income side of my portfolio and I’m just some guy behind an iPad and may not have your best “interest” in mind.
    Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. I highly recommend everyone reading this read Anthem by Ayn Rand. I am Azure

    1. AB ! good intro to my question. You mentioned PM’s, Today Ag closed down to 17.59oz I assume your laddering into this and Au.
      Seems like PM’s are inverse to the economy and go down in a recession and rise as the economy grows. Any guesses on what a bottom would look like adjusted for inflation? In the past I have seen 8.00 and 12.00 hold steady I think we are long past ever seeing those numbers again for Ag.
      Second, for people new to this can you give us an example of the current spread? As an example, say I would have to pay 21.60oz today to buy Ag ( depending on volume discount ) But If I sold today the dealers would be offering what? say 15.60oz?
      Meaning a buyer would need to hold say until Ag is back to 25.60oz just to break even. Long way from 17.59oz.
      Note-these numbers are just for conversational purposes only.
      * Full disclosure, I consider PM’s not an investment, but emergency funds. I sold in 2011 to cover expenses, but then again I tripled my investment. Only took 23yrs
      Just personal experience to share with those thinking about it.

      1. Hi Charles,
        (1) precious metal usually run counter to the US dollar; look up the chart on DXY. When our brilliant Fed is raising the Fed Funds rate and/or the Discount Rate the dollar will get stronger and precious metals will get weaker. There are many reasons for owning PM’s, but my main one is to not have all my assets in US Dollars.
        (2) I rarely sell, but when I have I will usually sell on Reddit https://www.reddit.com/r/Pmsforsale/ there are 34K+ members here and some have become my close friends. I have also sold to my (LCS) Local Coin Shop or at a coin show here in Ft Lauderdale. The spreads are not bad and on Reddit I have captured/sold just like a dealer. I own an incredible amount of palladium I bought when the spot was $400-$450 and rhodium at $2000-$3000. I have bought gold coins in many countries I have visited, it is one of my traveling “secrets” I look forward to going to see what is out there. I’ve even visited some active PM mines in many of these countries. I’d be glad to answer any other questions you may have.
        Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves. I am Azure

        1. Thanks AB, I used to have a interest in Geology. I forgot about history and remember now Silver took off in the middle ages after a large deposit was found. Now a tourist attraction I think. Reminds me, I am going to Europe next year and should look it up to see if its near where we are planning to visit. Yes I considered him a friend, my LCS owner retired to AZ and he did me some deals when he was around.

            1. To: Azureblue

              I’ve been meaning to go to the Ft Lauderdale Coin show.
              Maybe, one Sunday soon.
              I get their e-mails, but haven’t yet gone this year.

              I am Newman

              1. Newman, there are (2) that I know of in Broward County:
                Ft Lauderdale Coin Club show is the 3rd Sunday of every month 9:30-2:30 at Volunteer Park 12050 West Sunrise Blvd Plantation and the Gold Coast Coin Club has their show the 1st Sunday every month at Rotary Club of Hollywood 2349 Taylor St Hollywood 33020 9:30-3:30. Have a great weekend, Azure

        2. AB,
          I have largely steered away from accumulating any PM mostly because I have no idea if what i am buying is even real or who is trustworthy to buy from. How do you get around that part of accumulating? or is it just chance and experience?
          I am Shep

          1. My thoughts Shep,
            I saw an Youtube video put on by a Australian team on how to tell if a Swiss Gram gold bar was fake. Lot of stuff coming out of China.
            I think it was Andrew Hecht over on SA mentioned in one of his jobs he had to inventory gold bars in a vault and they came across Swiss bars that were pure gold, but had fake serial numbers. There is a black market of gold coming from China being shipped to London by Brokers.
            The shows AB mentioned, if I was going I would look for vendors who are local so I would be able to continue to do business with them and build up a relationship with.
            GLTA

  10. For anyone still tracking the CDR-WHLR fiasco, the CEO of Wheeler has been BUYING both of the Cedar preferreds 3 days after the merger closed!

    WHLR bought the remaining 19 assets of CDR by assuming the $161M in CDR preferreds outstanding and getting a $130M loan from Key Bank.

    I have kept a very small position in CDR+C to monitor the action in this fascinating (and disturbing) deal.

    https://docoh.com/filing/761648/0001213900-22-051821/CDR-4

  11. Back to the tax free bond well as there is just too much water (cash) being built up: I bought a new issue…
    $97.849 Yield to worst 4.386% Yield to maturity 4.386% Yield to call 4.510% Yield to sink 4.401% Settlement date 09/08/2022
    Bay County, Florida School Board CTFS PARTN
    CUSIP 072231GM9 Coupon 4.250% Maturity 07/01/2047 Moody’s / S&P Aa3/AA AGMC Insured
    Please do your own deep due diligence before you even think of buying anything I post as these fit my specific income portfolio and may not be appropriate for yours 🥳
    Party on Garth and I am Azure

  12. Wanted to share with everyone an incident that happened yesterday. Nothing to do with investing but financial. My coworker spent over 2 hours yesterday dealing with someone gaining access to his bank account and caught it just in time to prevent an ACH transfer of all his funds to a crypto marketplace.
    He has alerts set up on his account just like I do, but mine is set at notification on 100.00 not sure what his is.
    What happened is someone deposited .28 cents from a Target debit card into his account then did two withdrawal of .24 & .04 he called the bank and was in the middle of talking to them when the bank caught the pending ACH withdrawal
    They froze all his accounts and he went to the bank to setup new accounts.
    One possibility they talked about was thiefs using number generators to find active accounts. The bank routing number is just like the branch address so easy to get.

    1. Account numbers are printed on paper checks and I assume are included in electronic ones. The key question is how did the thief get access to his account so they could do the withdrawals and initiate an ACH transfer?

    2. Charles, glad that your friend caught this early. Hard to say how it was done. If you talk to any experienced bank manager and/or stock broker, they will likely tell you the most common “thiefs” like this are family members. Typically the owner is older and trusting of a younger family member to have access to bank or stock accounts. And they siphon off money one way or the other. One person I managed funds for, now deceased, had this happen and lost about 20% of his liquid net worth to a “trusted” family member.

      I talked to a sitting judge a few years back at a social setting, not in his court. Asked if he every heard cases along these lines and reply was something like: “Are you kidding, we have cases like this all of the time.”

      Scammers everywhere. . .

    3. Top scams are below. They would have to get all your info and including the exact deposit amounts correct. A good guess is a family member. If not, one of the below could have happened to them as well. Anytime you allow remote control of your computer, or fall into these scams where you give over info about your accounts, is bad news.

      Overpayment scams
      Employment scams
      Automatic debit scams
      Fake check-cashing scams
      Unsolicited check fraud
      Government imposter scams
      Phishing emails and text messages
      Charity scams
      Online lending scams
      Award and lottery scams

  13. Appreciate comments on these bank preferreds…are any these worth owning, if so, please share your thoughts…thanks!

    jpm/k – current yield (cy) 5.96%, ytw 11.12%
    bac/b – cy 6.0%, ytw 5.89%
    ms/o – cy 5.74%, ytw 11.9%
    wfc/z – cy 5.85%, 17.91%
    cof/i – cy 6.02%, ytw 17.0%

    1. I own BAC-B. It is qualified investment grade yielding 6% as of today, which is good. However, if interest rates continue going up, its value will drop. The low was $24.17 when interest rates shot up in June. If you can live up with some capital loss and collect 6% long term, it may not be a bad option.

      1. Newbie, Like MFZ said, many IIIers own these. I am willing to accept the pricing volatility in regards to interest rates to lock up some investment grade “annuity” like dividends and most are below par which embed a nice YTC or YTW. I also look at 6% as a decent hurdle rate to achieve for investment grade. I believe Tim has mentioned 5.5% for investment grade as a decent target for his liking. It’s all personal preference and those targets change as the markets change. (they will rise as interest rates rise and vise versa).

    2. Newbie,
      Possibly GS-J. Trading at $24.60 and callable on 5-10-2023 when it floats at 3.640% + 3-month libor. By call date $1.03 divs and $0.40 cap. gain = $1.43 = 5.8% in 8.5 months (about 8% annual). Possibly 7%+ if it floats.
      I think you mentioned earlier you bought ALL-B. At current price ($24.32) it will pay $0.64 in divs and $0.68 in capital gain if it gets called on 1/15/2023 for a $1.32 gain = 5.4% in less than 5 months. Reset at 6.5%+. Hard to beat for a BBB rated preferred. I’ll keep buying for my sock drawer.

      1. G2c,

        If it doesn’t get called on 5/10/2023 and simply floats, you don’t get the cap gain, right, in which case the yield would be just the divs?

        1. Gumfighter – Sorry. I should have added that I am assuming that they will be called. If projections for Fed rates are correct, then Libor could clear 4% next year, and ALL-B will clear 7% yield and GS-J will clear 7.5%. Perhaps they will not call these preferreds and wait for rates to drop, but I think there is a good chance they will be called. Personally, I hope they don’t – I would like to collect those yields for a couple of years. Either way, I think it gives them both some price support. I’ve been loading up on decent floaters and resets, especially if they are under par and have a good chance of being called. The Fed Chairman’s comments last Friday seem to indicate that it is the correct path for the next year or two, as many people have pointed out.
          Thanks for pointing out my lack of clarity – i should have proofed it better before hitting submit.

      2. ALL-B is one I have been eyeing too. I really want $23.50 as it has two more low fixed divi cycles. But one rarely gets what they want. So I bought 200 at 24.13 just now to keep a more disciplined eye on it. I have a lot in RZA, so if it gets rug pulled from me, this would make a fair “next man up” play at right entry point.
        I just want to hang on until some quality low coupon yield fixed drop some more. Started small ball buying there also.

        1. So what’s your exit strategy on these active F/F issues once the time is right, Grid? I guess in a way you’re kind of hinting at it right now with your beginning to look for some quality low coupon yield fixed, but do you exit when you think interest rates have stabilized? Wait until you think they’re going back down? Knowing how active you are, I suspect you’ll be quick to jump ship and hop on to better price appreciation plays when the time is right… And I don’t have to suspect at all if you’ll be faster to do that than i will… That’s a way too easy answer… ha

          1. 2WR, Wish I had the answer too! Its not like I dont have any fixed. I have a big slug of CEQP-, and 4-5 highly illiquids I just hold. Its just my focus has been running a good stash of live floaters if possible and been that way for many
            months now. I wont seriously look to roll over until next year minimum I suspect. This is not the typical buy the dip preferred period. Its a hole different game that hasnt been largely seen since before 08-09 crisis.
            2013 was supposed to but it caved quickly and never materialized. Oddly fixed HQ perpetuals still arent yielding as much as they did then though.
            Have some money largely impounded that wont free up until late in year and that is a good thing to me. Im not trying to maximize returns this late in year, just hang onto my profits and maybe add a 1% or 2% return more or so via some divis and interest payments.

      3. Thanks for the heads up on ALL-B. I figure a reset @ 6.7% on 1/15/23 based on yesterday’s closing price. Not all low IG’s are created equal and I think Allstate issues are much more solid than say a similarly rated and yielding issue like PSEC-A.

      4. this should probably go in the broker section, but do all broker’s treat gains on ALL-B as capital gains and none of them treat it as market discount, since ALL-B is actually a bond and not a preferred stock?

  14. Anyone hear anything about LANDO? Down 5.5% over past week, from around $26.70 and now $25.22. It’s been on my watch list and got an alert. It had been trading pretty much around $26 for past 6 months. So with the alert now doing some due diligence as to why the drop. Not seeing anything about a call. I did see that LAND amended it’s Series C offering, reduced from 20M shares to 10.2M shares. But nothing else.

    https://seekingalpha.com/news/3876383-gladstone-land-reduces-series-c-preferred-stock-offering-to-255m

    1. When you look at LANDO in the context of where other similar preferreds in the market place the real question has been why it was trading so high in the first place… it’s just been coming down to what should be competitive levels… it’s still got a ways to go imho.

      1. Perhaps, but by comparison it’s other issue, LANDM, is 5% coupon vs. LANDO 6% . LANDM has been flat during same time. LANDM closed at $24.98 and LANDO closed $25.38. So comparing the two issues LANDO now paying much higher yield.

    2. LANDO rebounded strongly near the close today to $26.16 on heavy volume. It is possible that the big drop in the last few days was due to a big seller liquidating his position; who knows.

      1. Yep, saw that pop back up. I managed to buy on the dip, so liquidation seems to be logical reason as to why the dip.

  15. Today seems calm in the fixed income sector.
    I put out 8-9 bids and only 2 were triggered.
    It seems there are very few motivated sellers and buyers.
    So, I’ll just cancel those 6-7 bids and wait for another opportunity.
    However, I did score some 250 VLYPO shares and 125 NYCBU.
    Good hunting all.

  16. How attractive are fixed to float issues? Grid posed an interesting hypothetical based on his 100% guaranteed forecast of a 4.0% 3 month LIBOR (3ML) during this interest rate cycle. I decided to model out how both fixed to float and/or variable rate preferreds would yield. If we know with 100% certainty what 3ML will look like over time, we can precisely model the dividend payments, but it guarantees NOTHING about the price. If the new yield goes to infinity and beyond, maybe the issue gets called. If that is the case, we are back to having to calculate yield to call and guessing whether it will be called or not. There have been several recent discussions on that very topic. I am assuming that Grid’s 100% guarantee of 4.0% 3ML expires at the end of 2023. For issues that start floating in 2024 and later, the mainstream consensus is that short term rates will be heading back down. Lord only knows, but it is probably risky to assume say a 4% 3ML floor ad infinitem. With that background, let me walk through the first case. I took all preferreds that were either fixed to float or variable that were currently paying out. Also I limited it to issues that had their first date when their rates could change up to 12/31/2023. There are many issues that do not float until later than that.

    Take PNC-P, which is a $25 face, fixed to float issue that was issued with a 6.125% coupon. It started floating on 5/1/22 at a rate of 3ML plus 4.0675%. Based on the last quarterly payment of $0.342 and yesterdays close of $25.22, gives a current yield of 5.42%. Assuming it is not called, when 3ML goes to 4.0%, the coupon yield will be 8.0675% which is 2.64% above its current yield. Maybe that is telling us that the market thinks some combination of 3ML will NOT reach 4.0% and/or if it does, PNC will call the issue. Can’t say for sure, but if we really think it will get to paying an 8.0% payout, it would seem attractive.

    Here are the 54 issues, sorted by largest delta of “New” coupon yield minus current yield. Format of the data is:

    Ticker, Coupon type, First float date, Interest rate index, interest rate margin,
    Current yield, “New coupon yield assuming 4.0% 3ML”, Delta between new coupon yield and current yield

    (Sorry, this is complicated and difficult to present without easy formatting.)

    PNC-P, FixFloat, 5/1/22, 3ML, 4.07, 5.42, 8.07, 2.64
    CUBI-E, FixFloat, 6/15/21, 3ML, 5.14, 6.94, 9.14, 2.2
    GS-J, FixFloat, 5/10/23, 3ML, 3.64, 5.55, 7.64, 2.09
    CUBI-F, FixFloat, 12/15/21, 3ML, 4.76, 6.67, 8.76, 2.09
    ZIONO, FixFloat, 3/15/23, 3ML, 4.24, 6.2, 8.24, 2.04
    ALL-B, FixFloat, 1/15/23, 3ML, 3.17, 5.18, 7.17, 1.98
    AGNCN, FixFloat, 10/15/22, 3ML, 5.11, 7.17, 9.11, 1.94
    NLY-F, FixFloat, 9/30/22, 3ML, 4.99, 7.12, 8.99, 1.88
    NS-C, FixFloat, 12/15/22, 3ML, 6.88, 9.01, 10.88, 1.87
    AQNA, FixFloat, 10/17/23, 3ML, 4.68, 6.82, 8.68, 1.86
    VLYPO, FixFloat, 6/30/22, 3ML, 3.58, 5.77, 7.58, 1.81
    AHL-C, FixFloat, 7/1/23, 3ML, 4.06, 6.36, 8.06, 1.7
    GLOP-B, FixFloat, 3/15/23, 3ML, 5.84, 8.17, 9.84, 1.67
    GLP-A, FixFloat, 8/15/23, 3ML, 6.77, 9.25, 10.77, 1.52
    NS-A, FixFloat, 12/15/21, 3ML, 6.77, 9.25, 10.77, 1.52
    VIASP, FixFloat, 4/15/22, 3ML, 6.58, 9.06, 10.58, 1.51
    GJR, Variable, 2/27/06, UST3M, 0.7, 3.25, 4.7, 1.45
    MS-E, FixFloat, 10/15/23, 3ML, 4.32, 6.88, 8.32, 1.44
    C-K, FixFloat, 11/15/23, 3ML, 4.13, 6.72, 8.13, 1.41
    GJO, Variable, 10/6/05, 3ML, 0.5, 3.16, 4.5, 1.34
    PYT, Variable, 7/16/04, 3ML, 0.85, 3.51, 4.85, 1.34
    GJP, Variable, 11/14/05, UST3M, 1.15, 3.82, 5.15, 1.33
    RJF-A, FixFloat, 4/1/23, 3ML, 3.99, 6.66, 7.99, 1.33
    ZIONL, FixFloat, 9/15/23, 3ML, 3.89, 6.59, 7.89, 1.3
    GJS, Variable, 3/31/06, UST3M, 0.9, 3.6, 4.9, 1.3
    FITBI, FixFloat, 12/31/23, 3ML, 3.71, 6.45, 7.71, 1.26
    DCP-B, FixFloat, 6/15/23, 3ML, 4.92, 7.72, 8.92, 1.2
    C-J, FixFloat, 9/30/23, 3ML, 4.04, 6.91, 8.04, 1.13
    WFC-Q, FixFloat, 9/15/23, 3ML, 3.09, 5.97, 7.09, 1.12
    DCP-C, FixFloat, 10/15/23, 3ML, 4.88, 7.81, 8.88, 1.08
    NLY-G, FixFloat, 3/31/23, 3ML, 4.17, 7.13, 8.17, 1.04
    NSS, FixFloat, 1/15/18, 3ML, 6.73, 9.7, 10.73, 1.04
    SNV-D, FixFloat, 6/21/23, 3ML, 3.35, 6.39, 7.35, 0.96
    NS-B, FixFloat, 6/15/22, 3ML, 5.64, 8.74, 9.64, 0.91
    BML-G, Variable, 11/28/09, 3ML, 0.75, 3.92, 4.75, 0.83
    GJT, Variable, 5/1/07, UST3M, 0.8, 4, 4.8, 0.8
    USB-A, Variable, 4/15/11, 3ML, 1.02, 4.34, 5.02, 0.68
    ATCO-I, FixFloat, 10/30/23, 3ML, 5.01, 8.34, 9.01, 0.67
    BML-H, Variable, 11/28/09, 3ML, 0.65, 4.01, 4.65, 0.64
    ET-C, FixFloat, 5/15/23, 3ML, 4.53, 8.19, 8.53, 0.34
    ET-D, FixFloat, 8/15/23, 3ML, 4.74, 8.45, 8.74, 0.28
    MET-A, Variable, 9/15/10, 3ML, 1, 4.72, 5, 0.28
    USB-H, Variable, 4/15/11, 3ML, 0.6, 4.41, 4.6, 0.19
    GS-A, Variable, 4/10/10, 3ML, 0.75, 5.01, 4.75, -0.26
    BML-J, Variable, 11/28/10, 3ML, 0.75, 5.05, 4.75, -0.3
    ZIONP, Variable, 12/15/11, 3ML, 0.52, 4.99, 4.52, -0.47
    GS-C, Variable, 10/31/10, 3ML, 0.75, 5.29, 4.75, -0.54
    BML-L, Variable, 5/21/12, 3ML, 0.5, 5.04, 4.5, -0.54
    GS-D, Variable, 5/24/11, 3ML, 0.67, 5.25, 4.67, -0.58
    MS-A, Variable, 7/15/11, 3ML, 0.7, 5.35, 4.7, -0.65
    TFC-I, Variable, 1/1/99, 3ML, 0.53, 5.24, 4.53, -0.71
    SLMBP, Variable, 6/15/11, 3ML, 1.7, 6.42, 5.7, -0.72
    BAC-E, Variable, 11/15/11, 3ML, 0.35, 5.07, 4.35, -0.72
    JBK, Variable, 5/1/04, 3ML, 0.75, 6.18, 4.75, -1.43

    The odds of me having an error somewhere is pretty high, so please speak up if you see something wrong. The “first change date” is mushy. In some cases, the date they show is when the period starts with the new rate. In other cases, it is the date of the first payout with the new dividend rate. So the dates I have, might be wrong by one quarter, depending on which date you think should be used. The other factor I did NOT model is that some issues have maximum rates they will pay. It is possible that 3ML going to 4.0% would cause their rates to max out at less than what I show.

    1. Ha Tex. Im “hoping” for 4%. Im thinking 3.5 is in the bag….. But dont have a bet on it like I do the Colts 9.5 season over!

      1. Grid, there are some PHD economists out with 5.0% forecasts, so maybe we take the under on that one! I agree with you that 3.5% is in the bag. In that regard, I think the list I showed presents a few opportunities. Like the PNC-P example I showed first. It’s last payout of .342 meant they were using a 3ML of 1.4%. So the simple act of them catching up to the current 3.0 3ML is going to increase the dividend to .44, which is 29% increase in a single quarter. Many of the other issues have yet to catch up to 3.0, so might have a few sock drawer candidates in there. .

        1. Tex, JBK is not a floater. Its fixed off the bond coupon held in trust of 6.34%. Lehman going bankrupt ended the counter party swaps on synthetic adjustable. A lot of the fates of these floaters I suspect is in the hands of the fixed rate market. The asymetric risk still benefits the issuer even with adjustables. The only bone we get is the yield goes higher near term unless yanked from us.
          The only ones that avoid this is say an SLMBP type where even at a 5 Libor handle its still relative cheap capital with the 1.7% adjustment. Backing out divi since it goes exD Sept. 1, you get an interesting comparison with SI-A which is also Ba3 rated. SI-A sits presently at $17.72 with a 7.58% yield. SLMBP was 6.5%. It will set next quarter next week but looks to be about 3.05% plus 1.7%. So its jumping from 6.5% to about 8.19% for Decembers divi.

          1. Grid, thanks for the explanation on JBK. I did look at the prospectus briefly where it said: “Interest on the Certificates will accrue at a floating rate based on Three-Month USD LIBOR plus 0.75%,” but I did not grasp that the Lehman swap was what made it float. I will change it to the fixed category. It is just one of several “one-offs” we have to deal.

            1. Tex, it has a most interesting case history. Including ghost of Lehman suing JBK to reclaim the “spread money” it was making when US Bank claimed the swaps were void with Lehman bankruptcy and just distributed the bond interest directly to shareholders. JBK was in danger of being drained from lawsuits, but courts dismissed claims.

    2. Tex – Right off the bat, I’m thinking your PNC-P example has a wrong conclusion… Yes, it’s last paid coupon was $0.342 but using that to calculate its present current yield would not be right because the NEXT coupon to be paid already has been set (on July 28 I believe) and that should be approx 6.84979%. So it would be wrong to say PNC-P at yesterday’s close of 25.22 was trading at a 5.42% current. It would be trading off an upcoming known next quarter’s dividend of approx $0.4281 and, therefore, a 6.79% current yield, right? Same would be true for your current yield numbers for CUBI-E. Does that tell you something different about possible expectations on PNC-P? I’ll not venture a guess about what that might be saying regarding expectations re a future 4% LIBOR rate but it does say to me PNC-P is trading on a “pinned to par” high assumed likelihood of call on next available call date basis…. YTC 11/1 = 4.87% approx based on $0.4281 coupon payment – still relatively attractive.

      Thanks for posting your list… You know what might be interesting? Throw 5 Year US Treas resets into the mix and see if there’s any conclusion to be had vis a vis how they are being valued vs 90 floaters… How many resets are there that fit your same parameters of having to change by 12/31/23?

      1. Ooops… remembered too late to correct that CUBI-E is not the same as PNC-P as its next coupon (after 9/15) has not yet been set and your current yield number looks closer to right than what you used on PNC-P

        1. 2wr – my reading is that the rate for the next payment (12/15/2022) on CUBI-E will be set based on 3ml on about 9/13 (the 2nd business day prior to the 9/15 dividend payment day) About 8.14% at 3% 3ml.

          1. Tim – I don’t disagree on your numbers but to perhaps clarify what I was attempting to say and bungling Tex’s current yield number as listed on CUBI-E is technically correct for now because it reflects the next known future payment coming up on 9/15, even though nobody buying off the current yield number today will be entitled to that coupon… What is important though is that CUBI-E is guaranteed to survive up until the NEXT coupon payment due 12/15 but that actual div amount will not be set in stone until 9/13 I believe… Yup it’s worthwhile to estimate the current now because you’re going to get that 12/15 coupon no matter what and it’s so close to determination date that you can be pretty sure your estimate will be close, but it’s not going to be 100% accurately known until 9/13. No question it’s going to be a juicy one even if CUBI does end up calling E on on its next available date of 12/15.

            I should have paid closer attention to the amount I own… Had I done so, I would have owned more than I do right now……

            1. 2WR, No time like today…I bought an unneeded 200 more of F today below 25.30 and still havent started paring E yet…..Its a disease I tell ya!

              1. Grid, I’ve lost the original reference: what’s your reasoning in buying F and shedding E?

                Based on today’s closing prices, for those issues and 3ML at 3%, I calculate 28bps difference between their effective yields, with E on top (E at 7.943% and F at 7.658%). Are you thinking that makes E the earlier call target?

                1. Both E and F are only callable on the same div payment dates, next one being 12/15… I suspect the reasoning would be the slightly greater possibility that F might be left outstanding and E gets called on 12/15…. Personally I think it’s only a slim chance the CUBI won’t deal with them both at the same time whenever they deal with them at all

                2. Bur, yes basically. I have some F’s at $24 but will just use last purchase today. F divi is .4211 about 2.5 cents less. But basically todays purchase was bought about 13 cents below par while, one would be about 16 cents over par buying E today. I really think one has to assume there is a reasonable possibility E gets called first and if its after next payment buying F was a better purchase YTC than E even if they both get redeemed next payment.
                  Mbg, I hope it stays alive awhile for us, as there are limited other options with the cash and I cant pile more into what I have already.

                3. Bur,
                  Here’s one way (and by no means the only way) to look at it. With E you get about $0.024 more per quarter than with F. Last I looked, the price of F was $0.18 higher. If they’re called within the next 7 quarters, you’re better off with F. If they live for 8 or more quarters, you’re better off with E.

              2. Just got notice from TDA today that CUBI-E div will be .4452 on 9/15. That’s 7.125% coupon, isn’t it? Too late to buy for this coupon though I think as tomorrow’s ex-div…. I don’t own F so didn’t get that memo…

                1. 2WR, That was stealing candy from the baby. Buying more F day before ex and dumping a lot of my E at 25.35 and over today. Amazing how people will overpay on exD day.

                  1. Grid:

                    In my pre-retirement days as a REIT portfolio manager, we had offshore accounts that (for tax purposes) did not and could not receive the dividends on any income securities, even though they wanted exposure to various yield sectors.

                    So we would do dividend “swaps” where we would sell the security on the day before ex-div day, and then buy it back on ex-div day, hence trying to “capture” the dividend through a sale and buy back to create a lower cost position. These accounts never worried about wash sale rules.

                    My guess is that some of this still goes on today and accounts for at least some of the buying power on ex-dividend day for REITs, preferreds, etc.

              3. Grid, if you get vaccinated and wear a mask, can you safely buy more?
                I’ve got the disease too, buy so far am asymptomatic.

      2. 2WR, before I posted this list, I went and checked the last dividend that was either paid out or had been declared for an upcoming payout on every single issue. I checked PNC-P on two different brokerages and neither of them show that the upcoming dividend of ~ $.4281. Like I posted to Grid, many of the dividends/current yields I show are still catching up to Libor which has risen steeply in the last few months. Be it right or wrong, I was 100% consistent on the methodology I used.

        I have all of the data on fixed, fixed to float, variable, resets, and a few more oddballs for both prefs and babys/terms. I figured the issue was complicated enough as it was, so I limited what I presented to fixed to float and variables on prefs only. There are only three resets that have their first date before 2024. EBBNF is 9/1/22 with UST 5 year and 3.15% margin. TVC and TVE reset in 2003/2004 tied to UST 30 year and have margins of 0.94% and 0.84%. The other 18 resets range from 2024 to 2029.

        There are 11 babys/terms that are fix-float or variables with their first date before 1/1/24.

        1. Thanks, Tex…… didn’t mean to sound critical as I certainly know you have amazing analytical tools at your fingertips to service the needs of your fortunate to have you clientele and you know how to use them for studies like this…. Being as I am involved in PNC-P I just happened to notice that blip in your system….. PNC-P’s also indicative of something I think is missing overall in the world of F/F – a uniform way for shareholders to know or be informed in advance of what the upcoming payment is going to be at the time it’s configured, not the time it’s declared… It all seems to be hit or miss. My mention of .4281 on PNC-P is not meant to be taken as gospel either. It’s my estimate based on what’s known for how they’re supposedly calculating each quarter now that they’re floating…. Until it’s actually declared, which is usually months after it’s been calculated, everyone on practically every issue is seemingly on their own trying to figure out what’s coming..

          Resets apparently differ from F/F in that they do seem to announce the new rate when they reset, at least ENB did when they announced in a press release the reset rate (5.8579%) that will go into effect for EBBNF on 9/1. However ENB also has EBBGF not on your list which is also USD denominated that resets beginning 6/1/23 @ 5 Yr US + 3.14. They also have the more complex ENBA note which is a F/F beginning on 4/15/23 @ 3 month LIBOR + 3.593 and then increasing in ’28 to +3.843 and again in ’43 at +4.593 until maturity, all assuming they remain outstanding…. ENB is the only Canadian I follow and then only those that are USD, and it also is the only reset issues I own (EBGEF and EBBGF), so I just happen to know those. EBGEF resets initially outside of your range beginning in 3/1/24.

          ps as I”m sure you know, TVE and TVC don’t really fit the mold as either F/F or reset as they most likely will never reset again as they only reset downward in rate, never up. Only if 30 yr US Treas goes below 1.376% will TVE reset and 1.194% for TVC.

          1. 2WR, I appreciate the feedback. I agree with you it is difficult for investors to know in advance what the new dividend rates will be on these floaters. I doubt most investors are as involved as III’ers are! The question is whether any of these represent good opportunities, possibly because “we” anticipate upcoming dividend increases before the masses do?

            It would take some effort, but I could build up better models for each floater to more accurately forecast dividend payments before they announce them. I rather spend the time out on Melton Hill Lake . . .

            I will add the ENB issues to my database.

            TVE and TVC are two more in the “one off” category, just like JBK is that Grid mentioned. There are several of these that do not fit nicely into the simple categories we try to assign. I will move them into the “Fixed” bucket.

            It definitely “Takes a Village” to get these issues properly categorized and understood. Appreciate the feedback from all.

            1. Melton Hill Lake meaning Oak Ridge area? We’re not far apart as I am on the northern end of Chickamauga Lake just south of Watts Bar.

        1. Then, if they’re true to form they should be announcing a dividend of about $0.438 for PNC-P on October 1.

          1. nhc – I’m learning not to doubt you but I’m coming up a penny shy from you using 7/28 as the set date. Where am I going wrong? Should it be 7/27?

            1. 2WR,
              This is the formula that I used: (.027823+.0407)*25/360*92
              I suspect that the 1 penny difference comes from my taking the annual dividend, dividing by 360 and multiplying by 92, rather than just dividing the annual dividend by 4.

              I think a more important date than October 1 is October 2, when we find if PNC-P lives for another quarter. I see a pretty high probability of call, but that’s OK because with a price of $25.24, I get a YTC for a 11/1 call of 4.54%. Obviously not what you want on an ongoing basis, but damn well better than cash. And if it lives, so much the better.

              RZA is also one of interest now. If the intent is to call, now would seem the optimal time to do so, because of the dead zone between 8/31 and 9/15. That is, if they notice a call now, they pay less than a full 30 days of accrued interest. So every day that goes by without a call would seem to signal a lack of urgency to call RZA. But who knows.

              And, by the way, whatever you do, don’t stop doubting me.

              1. Hmmmmmmmmm, that could be the answer…. It didn’t occur to me to adjust for the 360 day year…. that might make the difference.

                Am in and watching both RZA and PNC-P carefully. It’s nice to have BRG-C now a done deal with the call announced.. tough times on these deals in limbo like NEWTZ and my Tenneco bond…

                1. You posted on RIA about the possibility of getting an extra 5 days of dividends on the BRG-C based on the 10/6 call date. I show the last dividend being paid on 7/6. Are those 5 extra days actually possible?
                  NEWTZ has not worked out as expected, due to the delay in conversion to a BHC, but I’m not selling at the present price.

                  1. Looking again, I see now that the BRG-C payments are for the quarters ending on the last day of the previous month, so now I see where the extra 5 days come from.

                    1. Oh good, you looked it up and now that I’ve destroyed the weed population for now, I don’t have to…. yay..

                      Yes, NEWTZ’s been a disappointment but still with it being a 3 1/2 year maturity, I can live should it for some reason run to maturity… Still, as long as NEWT wants to become a BHC and to do so by purchasing this NBNYC, the language seems absolute that they must retire NEWTZ and L before they can close…

                      At first NEWT was impressively responsive to discussion on this but now they’ve completely shut me down. I asked a simple YES or NO question today, purposely structured to not ask anything proprietary. Here’s what I asked and then their response..

                      Question: WITH THE EXCEPTION OF THE OFFICIAL DOCUMENTS SUCH AS THE STOCK PURCHASE AGREEMENT AND THE PROXY AGREEMENT, HAS THERE BEEN ANY PUBLIC MENTION BY ANY MEMBER OF THE NEWT MANAGEMENT TEAM OR INVESTOR RELATIONS DEPT  AS TO WHAT WILL HAPPEN TO THESE TWO NOTES IN CONJUNCTION WITH THe COMPLETION OF THE PURCHASE OF NBNYC SHOULD YOU BE SUCCESSFUL IN COMPLETING THIS PURCHASE AND SUBSEQUENT CONVERSION TO A BHC?

                      Answer: Good Morning,

                      As we have previously discussed, I cannot answer your question as it would constitute providing non-public material information. 

                      Best Regards,

                  2. I’m fuzzy on the details, nhc, and at the moment the weeds in my garden will be taking precedence over revisiting, but the extra days on BRG have to do with the actual accrual date for dividends being from the 1st of the quarter instead of from payment date to payment date – or something like that……..at most it’s only something like an extra 2.2 cents so not much

                    1. 2WR, NEWT’s answer was nonresponsive since you explicitly asked for public information. They could, as you said, simply have answered yes or no. I guess they could have misread the question, but it sounds like they are blowing you off.

                      You might try quoting them the language you are referring to and ask if they feel bound to it or if their interpretation matches yours. That way they are not directly commenting on what they plan to do, and are just clarifying something already fully public. And if you want more information on the timing you might try the other party and ask the bank. But I think they released something on timing not that long ago IIRC.

                    2. Scott – as you can tell from their initial comment, Ive been over that area with them in the past…. In fact, in first conversation with them, they asked me where I saw the specific language about it being a pre-condition…. That’s what now concerns me… They continue to say they’re committed to this deal and still issue projections for a timetable to close even though it’s now been extended into the first quarter… However, I have never heard them publicly confirm what’s written in the documents about this pre-condition…. And quite frankly, the bank purchase agreement is a mere $20 million transaction, IF the company was caught off guard about the mandatory requirement to retire $150 mil of notes in order to close the deal, then that might give them pause about the whole transaction given how much interest rates have moved up since they first announced this… Yet they still say they’re committed to the deal but will not confirm they are or are not committed to the language stating they must redeem the notes or in some other manner eliminate the shareholder friendly BDC language protection written into the two prospectuses.

                    3. 2WR, mulch is your friend! Use any number of 1″ to 6″ thick organic mulches:
                      -Prevent weeds from germinating
                      -Keeps direct sun from hitting the soil which raises the surface temperature
                      -Keeps moisture levels more constant due to reduced evaporation
                      -Enhances soil health as the mulch decomposes
                      -Plants will be healthier and more resistant to disease/pests
                      -LESS work for 2WR weeding, more time for obscure preferred issues
                      -Use compost, shredded tree trimmings, leaf mold, etc, anything that will naturally decompose into the soil
                      -Do NOT use rubber, fake died chips, anything in bags from big box stores

                      And yes, we have many “trades” in mulch recently, many cubic yards worth

                    4. Tex – Thanks for the tip…. Yes, I’ve used mulch in the past but decided to skip this year… For convenience sake in spreading I use bags and usually go with pine bark nuggets, but decided to skip this year… We have to get over 240 bags delivered based on previous years but this year I skipped the expense due to unexpected 1.8k expense to keep a probably 30 year old or more 12 zone well and irrigation system alive….. And yes mulch works…..and so does the irrigation system after having to reroute due to magnolia tree roots breaking pipes and now being so large as to make pipe repair impossible. – that and replacing 25% of the outstanding valves

                      Now what’s to be our next obscurity story in preferreds???? I don’t think I can out obscure Grid, but I do love story bonds/preferreds

                    5. 2WR, There is hardly anything obscure anymore! But here is semi obscure, you may start tracking if it drops more. The old 20th century issued Prologis preferred PLDGP. It dropped to $58 today. Most people would love a chance to go back in time to buy any preferred back in March 2020 covid…Except PLDGP as it bottomed out at only $59 back then. I saw 3,000 share ask out but it got hidden and went to 100 showing. So it could drop more.
                      At basically stripped 4.8% YTC in late 2026 its priced about right considering its A rated senior unsecured late 2026 bond is now 4.09%. But it could get interesting if a dump occurs. Its only about a $50 million par float now and doesnt trade often. But, its not a mandatory maturity as Quantum has stated. Their SEC filings state Prologis can redeem 11-13-26, not that it is redeemed then. So I view it as a perpetual though I largely suspect they want to get the rest of it off the books as soon as they can.

                    6. Thanks, Grid – For some reason I remember looking into the name Prologis but never got any further than that from a being interested point of view… Just on first blush description you provide, it doesn’t yet sound particularly compelling..

                      On another IG or super IG topic, TVE seems pretty cheap right now doesn’t it? When compared to TVA bonds in the big boy market, it’s trading at a YTM that’s about 100 basis points cheaper than their bonds in the same maturity range… Granted the absolute yield is nothing to write home about, but still in the AAA realm, it’s really good at around 4.50% for its 2029 maturity…. I know you brought me back around on looking at it after I’ve neglected it and it seems like a good one right now to perhaps toe back into based on your looking into IG discounted bonds,. and your downside then still remains cushioned by its short maturity… U back in? I’ve made two tiny buys and I think I’ll continue to add…. With no credit risk, it’s an OK set it and forget it issue – just keeping the av cost current.

                    7. 2WR, I did a quick flip on the sister one for a quarter or so on a volume movement a month or 2 ago. Glad I sold as short end yield curve has really changed since then. Im looking for deals or trades so not really interested in a 2029 at that yield for a hold.
                      Triple A is just overkill for me personally if the yield isnt there for duration wanted. But…if it is then it maybe a good buy. We just usually are looking for slightly different things for different purposes, not a right or wrong thing… I bought some 4 year step up notes that start at 4.1% with A- rating. 2026 is as far as I want to go out for 4% Im planning to hold. But Im not a ladder guy so my opinion wouldnt help much in that regard. But you know the TVA’s really arent a good true income generator ladder issues either, being their interest payment is so low while its relying on the cap appreciation to par to help mask the very low yield.
                      As far as Prologis that is why I was only suggesting to track if looking for a bargain in case the volume drops it. Prologis is one of the premier corporations of the world and certainly the number one Industrial Reit. If this thing got to $55, I would make this my number 1 position. But not just to buy and hold only though.

      1. Heron, that is a great question. I show 136 prefs/babys/terms that use 3 Month Libor. I only show 4 issues that use SOFR. I am not sure if all 136 prospectii discuss their fallback if Libor data is not available, so having a rule that universally applies is probably not a perfect answer. Maybe it works for 135 of them, but does NOT work for the one you buy. Not knowable without a lot more diligence on all 136 of them. My apologies for not having a more concise, actionable answer.

          1. Grid, I get that the Fed is putting out new rules for any Libor based loans that do not include fallback language. That works for all of the banks that are Fed members like Citi,JPM,BofA, etc. But I would not think that many preferreds fall under their jurisdiction. You can argue that all of the bank preferreds would, but how about MREITS for example? I would think the SEC would be the top regulatory agency over them. Or maybe FINRA as an outside group would step in. Not clear to me.

            1. Good points, Tex. My assumption was all would fall in line as that puts them in better legal standing to avoid lawsuits by following the new federal guidelines. Notice this regulatory action also addresses the fall back provision of “or last Libor quote” that many have. The new policy states that wont trump the new regulations.
              And of course its not impossible that there could be a rash of redemptions and reissues using SOFR and 5 year also. Should be interesting. My hope is staying in these and getting a fixed rate fallout and roll into them long before next July. Of course some of these may get redeemed before I get that chance assuming it even happens.

            2. Tex, I am assuming this may help with your question. It looks like they were trying to put everything under one tent…..
              . The Federal Reserve formed the Alternative Reference Rates Committee (ARRC) to look at new benchmark rates and assist with the transition away from LIBOR. The ARRC is an advisory board made up of market participants and includes banks and non-banks. The ARRC identified SOFR as the recommended benchmark rate to replace LIBOR in the United States.

          2. So Grid, Its still early for me on a foggy Sunday morning and I need to go back over the discussion everyone is having. But say today SOFR is 2.24 and they are talking about adding .26% as the “spread adjustment” Then the preferred has language of 3-3/8% plus LIBOR then a lot of floating preferred have language saying the last 3 month average of LIBOR I can see where you would need some sort of calculator.
            Looking at NYCB-PA and just picking a fixed point of the day for SOFR I am getting a rough estimate of 5-7/8% if it was to reset today ? Just for a rough estimate that sound about right ?

            1. Charles, my hope is they will use 3 month SOFR plus that tiny spread. Some people like Colorado Wealth and Trapping Value have already stated that is pretty much in line with 3 month Libor now and really is a non issue. We shall see I guess.
              Remember there isnt just one SOFR just like there isnt one Libor. Here is one subsegment I would hope is the 3M Libor transition to.
              Term SOFR is calculated differently than the other types of SOFR. It is not possible to calculate Term SOFR from the term treasury repurchase market. It is produced from the SOFR derivatives markets. Term SOFR looks most like LIBOR since it has a term curve. It is a forward-looking SOFR rate and is developed based on actual SOFR future transactions. It has one-month, three-month, six-month, and 12-month tenors. Term SOFR is known in advance of the start of the interest period and is the easiest to operationalize because it functions like LIBOR. The ARRC considers Term SOFR to be the preferred SOFR variant to replace LIBOR, and Term SOFR is the index we are most often seeing in the current market.
              Here are all the various SOFRs.
              https://www.bakerdonelson.com/sofr-the-secured-overnight-financing-rate
              Remember I am just giving hack analysis. Im kind of like PendragonY quote a bunch of stuff acting like I am smart. But unlike him, I will admit I am a dullard.

              1. Pendy never admits when he is wrong. he’ll argue with you until the cows come home or bk whichever comes first.

              1. Nh, Somebody else mentioned 22 bps and that may be it also. Im not 100% sure that number is in concrete and set either. But what you posted is what I hope they transition to.

                1. I hope so too, be it 22 bps or 26 bps. I like the protection that the FTFs provide against rising interest rates. A problem is that it gets too good to be true – that is, as the potential yield increases with 3ML, so does the probability of a call. Still, I like the odds with these.

    3. Wow! What a list . Thanks for taking the time to compile it. Think I may pick out a couple of the juicy ones and dip my toe in from some of the dry powder cash that has been accumulating.

    4. Everyone should keep in mind that LIBOR goes away 6/2023, and will be replaced with SOFR plus 26.2BPS, which is about 46bps lower than 3mo LIBOR today (2.28 + 0.262 = 2.542 vs 3.00)

        1. I was under impression they will be using 3 month term SOFR not overnight SOFR. Those are different numbers as NH quoted it as 2.9% today.

          1. Grid–I am on the hunt for info–I find lots of potential answers but none that are definitive–yet.

      1. Will the 26 bps adder be to the spot SOFR or the term SOFR for 3 months? Do you have a source?

          1. Sorry nhcoast–for some damn reason this went to spam. I think we have the
            SOFR thing figured out.

            1. Tim, it will be interesting to see if some redeem them and start fresh officially anyways.

              1. Grid–just read a piece that said that just paying the fixed portion and not the Libor portion was an option (suggested by Cohen and Steers). But I think the Fed is going to resolve it (just publishing some data).

                1. Does all this Fed involvement end up meaning we should fuhgettaboutit regarding what’s been said in prospectuses that outlined how they were going to deal with the end of LIBOR? Fed rules will override?

          1. I believe the change was not mandatory. But in the Adjustible Interest Rate Act passed on March 15,2022, there is a safe harbor from litigation if that spread is used. So the expectation is that all trustees will want to avoid litigation by taking the safe harbor. There is good summary in the recent fed proposed rulemaking:

            https://www.federalregister.gov/documents/2022/07/28/2022-15658/regulation-implementing-the-adjustable-interest-rate-libor-act

            Look in section 253.4 in the link:
            “ (ii) In place of one-, three-, six-, or 12-month tenors of LIBOR, the benchmark replacement shall be the 30-day Average SOFR plus the applicable tenor spread adjustment identified in paragraph (c) of this section.

            (c)

            Tenor spread adjustments.

            The following tenor spread adjustments shall be included as part of the Board-selected benchmark replacements as indicated in paragraphs (a) and (b) of this section:

            (1) 0.00644 percent for overnight LIBOR;

            (2) 0.11448 percent for one-month LIBOR;

            (3) 0.26161 percent for three-month LIBOR;

            (4) 0.42826 percent for six-month LIBOR; and

            (5) 0.71513 percent for 12-month LIBOR.”

            1. Thanks Roger; this is the clearest answer I’ve seen to how LIBOR will be replaced. Of course it aint over till it’s over…

    5. It looks like PNC will call the class P Prefered. On August 18, 2022, The PNC Financial Services Group, Inc. (the “Corporation”) filed a Statement with Respect to Shares (the “Statement”) with the Secretary of State of the Commonwealth of Pennsylvania establishing the rights, preferences, privileges, qualifications, restrictions and limitations of a new series of its preferred stock designated as the 6.200% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series V, $1.00 par value per share (the “Series V Preferred Stock”). The Statement was filed in connection with an Underwriting Agreement, dated as of August 16, 2022 (the “Underwriting Agreement”), among the Corporation, BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and PNC Capital Markets LLC, pursuant to which the Corporation agreed to sell to the underwriters 1,250,000 depositary shares (the “Depositary Shares”) each representing a 1/100th ownership interest in a share of the Series V Preferred Stock. Each holder of a Depositary Share will be entitled to the proportional rights of a share of Series V Preferred Stock represented by the Depositary Share.

      1. The 4242b covering this new issue came out August 17 [https://www.sec.gov/Archives/edgar/data/713676/000119312522223038/d268756d424b2.htm] and although it certainly looks as though this issue was done with redeeming PNC-P in mind, PNC has left the door open a crack as to what they will actually do… The Use of Proceeds section says, “We estimate that the net proceeds of this offering will be approximately $1,237,250,000 based on the public offering price of $1,000 per depositary share, after deducting the underwriting discount and expenses. We expect to use the net proceeds from the sale of our depositary shares for general corporate purposes, which may include investments in or advances to our existing or future subsidiaries, repayment of outstanding indebtedness, and repurchases and redemptions of issued and outstanding securities of PNC and its subsidiaries, including PNC common stock and PNC preferred stock. Pending our use of the net proceeds from this offering as described above, we will use the net proceeds to reduce our short-term indebtedness or for temporary investments.”

        So I wouldn’t bet against PNC-P being put to rest on 12/15, however, nothing definitive has been said as of yet…. That’s probably also because an actual call announcement cannot be issued prior to 60 days before the call date… That being said, a hint is a hint and I too believe they’re hinting by their actions.

    6. I just can’t believe how considerate you guys and gals are in taking the time to post these comments. they are really appreciated and for those of us that trade preferreds also very informative. Thank you so much.

    7. tex, I hate to be a pain in the you know what but could you shoot me a list of say five or six of what you think are the bet reset preferreds are. Really appreciate it. MY EMAIL IS RGTENNISGUY@gmail.com. Thanks so much

      1. Hi Richy, I do not have any recommendations on fixed to float and/or resets to buy. There is an underlying reason here. I NEVER, EVER want to be in a position where it might appear I was pushing a buy/sell to benefit our holdings. Some call it pump and dump. If I really mess up and post something that can be construed as pump/dump, I have failed miserably.

        Another point is that I am NOT trying to sell anything to anybody. So I never want to give the impression that I am saying something to get more assets to manage. When I post, my goal is for YOU to get a little bit higher return than you would otherwise. Nothing more.

        This all means that on a very regular basis, I have to keep my mouth shut here on III. Sometimes it is on issues that I am placing orders on. Other times it is on trades we were involved with.

        Lastly, there are several posters here that are infinitely smarter/better on these issues than I am. I am kind of a 3rd grade educated person with a spreadsheet. I try to have clean data, but that is not the same as having seasoned judgement. A while back, I commented that about 90% to 95% of our recent efforts were NOT in preferreds/babys/terms. That is still true today. Maybe in 6 months or 2 years, 90% of our efforts WILL be there. I just don’t know when.

        For the record, today we did NOT buy or sell any of the issues I posted about in any account.

        Thanks, T2

  17. Weekend points to ponder: Beef, Poultry, Lean Hogs, Palm and Canola Oils, Sugar, Tea, Oats, Cocoa.
    All items that have NOT gone up in price YoY.
    Hopefully you’ve paid off your house, ride your bike to the grocery store tomorrow and stock up. While you are riding ponder the problem of inflation.

    1. I never really thought about it but I eat oatmeal daily and really havent noticed the price of my oats going up, unlike some other things that I have noticed. But overall food is a relative small part of my expenses. “Hopefully you’ve off the house”, Joel, you will have to pry my 2.75% note from my cold dead hands. I aint paying it off early!

      1. Grid,. We made the last payment on our house about five years ago. We have zero debt now. The cost of housing here the Research Triangle of North Carolina is out the roof. A one bedroom apartment is now $1300 – $1400 a month. My house has appreciated about 20% in the last 18 months. At least we planned well for retirement and not suffering on the financial end (yet!). Hopefully things calm down in the future.

        1. Dj, I guess its all relative to locale. But I doubt there is ANY type of rental in my small town that hits even $1000 let alone $1300. Heck my house payment isnt that much either. But to NYC or LA renters I guess that may be a bargain. Definitely cant go wrong being debt free, no question. And being retired if I lived off investments I wouldnt want debt over my head either. But Im just basically a modest spending pensioner and its COLA’d. I dont even spend but maybe 65%-70% of it monthly and that includes my mortgage note and 0% car note payment, so I dont mind riding debt. Besides I have probably always owed somebody something ever since I took out a student loan 40 years ago. So Im quite used to being a debtor, ha.

          1. Speaking of COLA, what’s the SS COLA next year, the inflation rate like I-bonds, 9 something?

              1. Grid, Just tryin’ to figure out how the game is played, how the House runs the action and who’s the Mark at the table. I HAVE figured out that Market Media is the Shill.
                I love that line about, “if you haven’t figured out who the Mark is at the table it’s probably YOU!” UhhhhhhOhhh….

          2. Grid,. I’m afraid I missed out on a pension! Was a self employed engineer who contacted myself out ad a project / construction manager among other things. We live off Social Security supplemented by income from my portfolio. I was a good little boy who contributed each year to a self managed SEP. That SEP has grown into quite an income producing machine with a mixture of preferred stock, utilities, and a few common stocks who pay dividends. There are days that I wished I had a nice company pension, but then I look at my portfolio and see I did just fine. Lost some bucks on a few stocks, but made it up on others and learned a lesson or two. Tim’s website and all the comments from some very knowledgeable folks have really helped also.

          3. I am a modest spender too ( in some ways I guess). Just drove my 25 year old Honda Civic to town for shopping. Dang thing still runs like a Swiss watch with 273000 on the odometer and looks great. Makes a great about town car and so easy to park. Drives great too!

      2. Ha! that’s why. I asked my local feed supplier about the last few bags of C.O.B. I have bought. Told them it looked like there was less corn in it but more oats.
        Corn takes more water to grow, and we are in a drought.

      3. Is It Better to Rent or Buy?
        https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

        Using the calculator attached above. We found buying over renting made sense in the case of getting all the attached variables right.

        -Low negotiated mortgage rate (currently: 2.58% 30yr)
        -avoid mortgage insurance payment (20% down payment)
        -Buying in area with low property tax rate (<1%)
        -Avoid lawyer/realtor closing costs to conclude the sale. We bought new and the Home builder did not charge us any fees.
        -Paying $0 in renovation costs over the last 9yrs of living in the place.
        -Minimum insurance with a high $3000 deductible. Geologically safe area with minimal weather anomalies (Hurricanes, Tornadoes, Hale).

        What I have found that in most cases the above criteria you are unable to change based upon your location and as a result it makes more sense to rent than own.

    2. I went to the liquor store and noticed something peculiar. Alcohol prices haven’t gone up, at least not for what I buy. That settles it, stop buying groceries and just get drunk.

    3. anyone on the topic of ” week end points to ponder and inflation”, inflation is moving the 3 mo libor I like many of you hold a floating rate pegged to libor, example usb-h its not ever going to be a huge increase but when and how do they begin this libor determination date ETC ? thanks Mike

      1. Mike its in the prospectus. For USB-H it is written like most of the vast majority of them…
        For any dividend period, three-month LIBOR shall be determined by the calculation agent on the second London business day immediately preceding the first day of such dividend period in the following manner:
        So, 2 business days prior to the next accruing cycle. So you always know before the next 3 month cycle what you will be paid. With Fed committed to moving the short end higher this in turn ratchets up Libor. Im hoping for a 4 handle on that bad boy by early next year and having me a bundle of modest quality to decent ~ 9-10% plus issues spewing dividends back at me.

          1. Retired, there are going to be probably quite a few assuming any that may get redeemed. The usual suspects are rounded up for these kinds of yields. The NuStar preferreds and NSS subordinate debt. They would fly over 10% with 4% libor and even less. They have a private 12% preferred they have to knock off the stack first so they arent even looking at redeeming these yet.
            The CUBI preferreds will be around 9% if they are around. SLMBP will be knocking on 10% with a 4% Libor. SCE has a floating $1000 par issue that is 4.11% plus Libor and is under par. Of course you can buy CEQP- pretty much anytime at 9% plus but its a fixed noncallable type.
            There are all sorts of Mreits that probably are this neighborhood or about to float to that type of yield I suspect. I dont follow that sector but Im sure there are possibilities there too.
            I need to find another live floater myself as I need to pare down my exposure to CUBI and move to different floater.

      2. Mike –
        As so often is the case, the details are in the prospectus…. In the case of USB-H, it’s always been “floating,” but because it has a floor of 3.50% and floats at LIBOR + only .60, it’s been hidden for many years… Said another way, LIBOR would have to be over 2.90% before you would see a change in your dividend. And since we’re now there, VOILA! you should be seeing an increase…. If you are referring to EXACTLY when the calculation happens, well that’s detail that you find in the prospectus and it varies from issue to issue…. Here’s a starting point to find out for yourself – https://www.sec.gov/Archives/edgar/data/36104/000095013406005793/c03580b2e424b2.htm#208. See the section titled “Description Of Series B Preferred Stock.” It’s starts on p S-15 but it’s on the next page… See? BTW, you can find the link to the prospectus either right here on III or at quantumonline.

        1. thanks guys for the responses, I’ll go with “grids” estimate of 4.00% on the libor an enjoy the steak dinner BONUSES as long as that holds up on my 1000 shares.

            1. grid, learning from the experts hypothetically if 4% is your hope how do prices react on these floaters Thanks mike

              1. Mike, the market will do what it wants to and as you know can kill everything in sight. So that being said, the really only thing you can count on is a higher yield, as the price could drop anyways.
                That being said a lot will depend on if the issue is past call, “call anchored”, higher adjustment or lower adjustment, credit quality etc. etc.
                An issue like say CUBI-E with its 5.14% adjustment just really isnt going to go anywhere in price because the higher Libor goes the more likely it gets called. Market knows that… And really the same I suspect will apply to an issue like NSS. If one really wanted to gamble on capital appreciation, and one is assuming Libor is heading higher and staying NS-B would possibly provide more trading opps because it is well below par.
                Your USB minimum floor is an odd duck because it was issued in a bygone era of where a 6% Libor in a growing economy would not have sounded odd. In fact most of those minimum floor tiny adjustment floaters were all issued back then. There could be some price improvements going forward here, but that depends on several things. I dont study these types enough to give a bad guess on any future price movements.
                The naked libor low adjustments like SLMBP historically shows more volatility. Last rate hike Libor cycles showed this one climbing around $70.

                1. RE: SLMBP
                  Thanks for your comments Gridbird and thanks also to TEX the 2nd for his excellent work and getting this discussion started.
                  Will the student loan forgiveness and the modified repayment terms that Pres. Biden just announced have any effect positive or negative on SLM? Your thoughts??? SLM has about 54% of the student loan market.
                  BTW, SLM has announced that they will be discontinuing libor within the next 10 months.
                  Interesting balance sheet. Sallie Mae’s debt is about 94% of assets. So little equity for the preferred as a percent of assets but presently has a cash flow cushion over the preferred payout. Dividends are not cumulative.
                  ” Dividends on shares of Series B Preferred Stock will not be cumulative. Accordingly, if our board of directors, or a duly authorized committee of the board of directors, does not declare a dividend on the Series B Preferred Stock payable in respect of any Dividend Period before the related Dividend Payment Date, such dividend will not accrue and we will have no obligation to pay a dividend for that Dividend Period on the Dividend Payment Date or at any future time, whether or not dividends on the Series B Preferred Stock are declared for any future Dividend Period. ” (Source: Prospectus Supplement dated 6-01-2005, P. S-11)

                  1. Biden loan forgiveness is unrelated to Sallie Mae sector being they are private loans.
                    Private student loan borrowers account for roughly 8% of the $1.71 trillion overall student debt in the United States.
                    Until a few years ago, Sallie Mae was America’s largest student loan company. It was a lender and debt collector, making money on both sides of its loans. But then the federal government cut off the federal subsidies and guarantees Sallie Mae feasted on for years. This caused the company to spin off its Federal Family Education Loans and some predatory private loans to a new student loan servicer it created, Navient.
                    After that change, Sallie Mae focused on offering borrowers private student loans and student loan refinancing options.
                    Here’s how to know if your Sallie Mae loan is federal or private:
                    If Sallie Mae has your student loans today, then those are private student loans.
                    If Sallie Mae moved your loans to Navient, those might be federal FFEL Loans or private loans.
                    If Navient moved your loans to Aidvantage, then those are federal loans.
                    https://www.tateesq.com/learn/sallie-mae-eligible-loan-forgiveness

                    Libor has to move to SOFR+add on, before next summer for all companies so that part is expected.

                    1. Dave,

                      If you’re interested in the student loan space but want something safer that SLMBP, I suggest you look at Navient bonds.
                      I’m long CUSIP 63938CAJ7
                      It has a maturity of June 2026 and a YTM > 7.95%

                      FWIW, I have a larger position in SLMBP.

                    2. Thank you Gridbird and Greg and thank you for the informative link.
                      I asked my question poorly. What I meant was if Sallie Mae would loose market share, i.e originate fewer loans, if the Federal student loans had less rigorous repayment terms, i.e. was more competitive, i.e. offered a more appealing product. But since private loans comprise only about 8% of the total market and Sallie Mae is about 56% of that, i.e. about 4% of the student loan market the question is moot.
                      I have put in a GTC bid. Wish me luck.
                      And thank you also for the Navient bond. A 46 month term has less interest rate risk and a known exit value on maturity.

  18. I sold all my SR-A, SYF-A and OXLCM (shares held for trading) for a 2-3 day profit of $500+
    I’m would have sold VLYPO but, it did not move higher the last 2 days.
    I’m not worried about Jackson Hole, I’m more concerned with Newman’s hole (in the pocket).
    Good hunting guys and gals.

  19. New purchase over last few days is old friend EP-C around 46. Goes ex September 14. Hard to find an investment grade with 5 1/2 year term and YTM of ~ 6.6%.

    Profits taken on PNFPP, SI-A, and just now SR-A.

    1. Here is an IG (Baa3/BBB-) cash bond that matures 2/2027 priced currently to yield about 8.8%:

      https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C991393&symbol=OPI5237985

      All the cash bonds of this issuer, OPI, are trading very weak. The company has an exchanged traded bond, OPINL, with a 6.38% coupon and a 2050 maturity. Currently trading around $24.30 or a simple yield of 6.6%. Anyone else watching these – just wondering if I’m missing something?

      1. ANYTHING run or affiliated with the PORTNOY FAMILY is a stay away from like the plague for me 🫤
        There’s no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating. I am Azure

      2. Office Properties Income Trust Outlook Revised To Negative From Stable On Elevated Leverage, Ratings Affirmed [STANDARD & POOR]

        Office Properties Income Trust’s (OPI) adjusted debt to EBITDA has been elevated due to debt-financed acquisitions and pressured operating performance.
        We expect adjusted debt to EBITDA to remain elevated over the near term as the company recycles capital from planned dispositions into development projects.
        S&P Global Ratings revised its outlook to negative from stable and affirmed all of its ratings on the company, including the ‘BBB-‘ issuer credit rating.
        The negative outlook reflects a one-in-three chance that we could lower our ratings on OPI over the next two years. The negative outlook incorporates the risk that credit metrics remain elevated near current levels should the company fail to execute its strategic initiatives and operating performance remains pressured.

        TORONTO (S&P Global Ratings) June 23, 2022—S&P Global Ratings today took the rating actions listed above.

        We expect leverage to remain elevated over the next 12-24 months as the company completes planned asset sales and development.S&P Global Ratings-adjusted debt to EBITDA was 7.3x as of March 31, 2022, a modest improvement from 7.5x as of year-end 2021 but a material increase from 5.9x the previous year. Office Properties Income Trust’s leverage spiked following the acquisition of two class A office properties in late June 2021 for $550 million. Following the acquisitions, the company guided to asset dispositions in order to repay debt and manage leverage levels. However, planned dispositions have taken longer than expected, with the company generating just $29.5 million of proceeds from asset sales during the first quarter of 2022, with current full year guidance of $400 million-$500 million. We think a worsening economic backdrop and rising interest rates could further delay the execution of the planned asset sales and adversely affect the pricing.

        Furthermore, following the acquisitions in June 2021, the company has undertaken two large development projects with total expected costs of more than $350 million. With expected deliveries during the first half of 2023, these development projects will weigh on leverage metrics for roughly the next 12 months and also present modest lease-up risk upon completion.

        The negative outlook reflects a one-in-three chance that we could lower our ratings on OPI over the next two years. The negative outlook incorporates the risk that credit metrics remain elevated near current levels should the company fail to execute its strategic initiatives and operating performance remains pressured.

      3. I don’t know, with so many people wanting to remain working at home and so many companies agreeing to it, I am not so sure office properties would be a good bet at this time. We still have about 30% of our workforce working from home. Same with hotels, once this summer is over and the covid pent-up demand wanes, I think they are in for some tough times also. The ridiculous room prices they are getting now will have to be lowered a lot.

    2. Flipped that one last weke and then bought some back. New one for me. I calculate the YTM at closer to 6.9% after deducting for the accumulated dividend.

    3. Flipped EP-C last week and then bought some back. New one for me. I calculate the YTM at closer to 6.9% after deducting for the accumulated dividend.

      1. MG – Fidelity bond calculator would have you believe you’d have to be able to buy EP-C @ approx 45.49 to get an almost 6.90% YTM…. With last at 46.13, I’m getting 6.58% YTM taking into account accrued. I’ve been meaning to add myself, but am pretty full on the name..

        1. I bought Thursday at 45.91 several trades happened at 45.90. Less 38 cents of accumulated dividends for 45.52 or 53 stripped price. 9.82% increase to par for 5.21% yield with 5.59 years remaining. That’s what I based my calculation on though I estimated the compound effect. I suspect Fidelity uses discount from par father than upgrade to par which is correct

          1. MG – Just for kicks I randomly chose 3 other online bond calculators and plugged in your numbers but for a buy on 8/27, not 8/25. http://www.moneychimp.com/calculator/bond_yield_calculator.htm came up with 6.607% YTM, but it didn’t even ask the frequency of div pay… https://www.calculatestuff.com/financial/bond-yield-calculator came up with 6.569% but wouldn’t allow fractional years so was based on 6 years to maturity, and https://www.calkoo.com/en/ytm-calculator would only come up with a rational number (6.7258%) if you set frequency of div payment at annual. Bottom line = everyone seems to have their own way of calculating YTM that varies slightly. What they are exactly at Fidelity, I’d be unable to say. but I’m sure Fidelity uses conventional bond industry defined assumptions for YTM calcs with no estimated compounding effects… I’ll stick with them for accuracy..

            “[At Fidelity bond yield calculator] Standard Securities Calculation Methods (Volume 1, 3rd Edition) , a publication of the Securities Industry Association, is used to calculate the Price/Yield. Fidelity is unaffiliated with the Securities Industry Association. While Fidelity believes the information provided by the Securities Industry Association to be current and accurate, Fidelity in no way warrants or guarantees the currency and accuracy of this information.”

            1. Feel like really nerding out??? I don’t, but for $!75 we can get this best seller way up there on the charts at Amazon – https://www.amazon.com/Standard-Securities-Calculation-Methods-Vol/dp/1882936027

              https://www.sscmfi.com/index.php?task=G-V1

              The book is organized in three basic sections: instruments described by classification, calculation methods and formulas, and the appendices. Descriptions for instruments have been compiled from and referenced against various sources and give basic information as to the nature and characteristics of various securities. The methods of calculation and formulas are broken down as to: (1) General Considerations, (2) Day Counting, (3) Determining Component Parts of a Period, (4) Interest Computations, (5) Price-Yield Computations, (6) Iteration Theory and Solving for Yield, and (7) Estimated Yield.

              The Appendix contains: (1) copies of important rules to be considered when pricing securities (FINRA Section 11620, MSRB Rule G-33, and CFR Part 356), and (2) several benchmarks for each formula, providing comparative calculation results for user verification.

              Apologies for the overkill………..

    4. RB, I bought some in the past as low as the 43.5 range so I can hope we see it again.

  20. For those of you keeping score at home; I bought more high quality insured tax free municipal bonds to fill in my maturity ladder that was decimated by low interest rate calls:
    Beautiful Webster, Texas Economic Development Corporate Sales Tax Revenue BAM Insured 4% due 9/15/37 @$99.553 YTM 4.031% YTC 4.077% these are tax free bonds that just IPO’d and will not settle until 9/15/22 rated AA by S&P with a A+ underlying from S&P, CUSIP 948399CZ1
    Please do your OWN deep due diligence and never follow some person behind a computer as they might not have your best “interest” in mind.
    Time is more valuable than money. You can get more money, but you cannot get more time, I am Azure

  21. Inverted yield curve, recession and inflation! Meb Faber did a joint interview with Campbell Harvey and Rob Arnott. Recall that Cam’s dissertation @ U of Chicago, was on the relationship of inverted yield curves to recession. A few points from the interview:

    1) Cam’s dissertation focused on 3 month to 10 year spread, instead of the 2yr-10yr spread that most talk about. Cam thinks it is important to use his original 3m-10yr. When he published his dissertation, it had accurately forecast 4/4 recessions. Since then it has accurately forecast an additional 4/4 recessions. It is NOT currently inverted but will be after the next Fed rate hike, be it 50bp or 75bp.

    2) They are in the minority thinking inflation has not peaked and mildly expect a 10+ print before the end of 2022. The people thinking CPI will be back down to ~ 3% by the end of 2022 are delusional, they explain why.

    3) Rob says in ~1980 when inflation was last this high, house prices were a direct component of CPI. If that were still the case, CPI would currently be printing ~ 12.5%. Changing to the “Owners Equivalent Rent” flattened the effect and spread it out over many years. Claims we will see elevated OER in the CPI calculation for 2 or 3 more years at a minimum.

    Lots of other interesting points. You can read the transcript, listen to the podcast or watch a Youtube of the interview. HIGHLY recommended if you are interested in inflation, recessions and/or interest rates.

    https://mebfaber.com/2022/08/22/e438-arnott-harvey/

    1. I’ve seen the #3 idea about “Owners Equivalent Rent” having baked inflation into the CPI for several quarters into the future in other places.

      Just asking, but aren’t the 5 year Treasury TIPS a good deal with their breakeven less than 3% and the CPI probably double that for most of their life?

      1. Steve,Tex, etc…..Not really familiar with “owners equivalent rent”, but a question that comes to mind is: if home prices were to fall somewhat, would that have the immediate effect of stopping past (recent) home price gains from showing up longer term as increases in CPI ?

  22. I’ve been buying today.
    WFC-L at 1252 mostly just because it was down 42 points. Flipped it at 1265+ because I already own a lot….I’ve owned this since the financial crisis.
    SR-A at 24.05? Yes please.
    PNFPP at par? Ditto.
    Added to NSS.
    Back into SI-A for a trade at 17.

    1. @RB

      Yep, I’m reloading today too…..
      DHCNI
      RGR
      INBKZ
      CTDD

      Yesterday 22nd
      RIV-A
      AAMPRA
      RPT-A

    2. Adding to some bought in mid-June lows such as
      C-J the 7%+ in $25.3x with ex-divd in Sep
      BHFAP & AAM-A in mid/low $24s and F-C low $24s

      Guess all these are selling off with big investors re-positioning before the Fed on Friday?

      1. One would think that you would see High Yield responding in a similar manner then. So far HYG and JNK are green today though, so I suspect this is something more specific to liquidity in preferred/baby bonds market vs. reflective of Jackson Hole risk. Of course we’ll all find out soon enough. 🙂

    3. My SR-A order is getting filled 10 shares at a time a few seconds apart.
      Wonder if that is an algo being triggered so as not to sell too many too fast.

      1. For the last couple of weeks, I have been seeing a big uptick in both
        -“tiny fills” (orders filled in a bunch of tiny trades under 5 shares each) and -“market open and close trades” (orders filled in the first or last seconds of trading).

        All I can say about the tiny fills is that it is mildly annoying.
        As to the opening and closing trades, I don’t understand what is going on.

        At opening, I often get tiny fills (handfuls of shares) at prices above (on sells) or below (on buys) the official opening price and that don’t show up in the intraday pricing. I had been thinking it was just people putting in orders overnight, but now I am seeing similar trades at close, so I think it is something else.

        At closing, I get the “market is now closed” message, then I get a handful of tiny trade notifications (timestamped in the last few seconds of trading). They are usually buys for a few shares (usually fewer than 20, never a round lot), and almost always at a price below the official closing price (sometimes 20 or 30 cents below). I am not complaining – but it is strange.

    4. I am out of PNFPP, which has risen $1.50 since my purchase on Tuesday. Also out of SI-A which has risen $1.00+.

      Looking to exit SR-A, which is up 80 cents from Tuesday.
      Still holding and planning to hold NSS,

    1. NewToThis2015–yes I own this and looked for any particular reason and find none. Lumen got approval from the feds to make a sale to Brightspeed for $7 billion–but that should be a positive. Looks like time to add a little more.

  23. Anyone have any idea what’s going on with the huge sell-off today in a good many preferred stocks?

    1. Well, OPEC’s statement and WTI up over $3 today have added helium to the inflation balloon. That and maybe other things energy related (isn’t everything?) can put a hickey on fixed rate pfds.
      JMO

    2. Have about 30 preferreds in my portfolio in financials, shipping, utility, assets managers, insurance. They are all down 2-6%. Not a clue why

      1. One of my worst days this year, definitly seems to be out of wack with what is going on in other markets, but who am I to question Mr. Market.

    3. The volume is note worthy on some of the ETF’s like PGX. My preferred screen is heavily tilted towards issues in those index/etf bucket. The one’s outside of the more liquid issues aren’t doing that much. Looks to me like someone/thing started unloading etf’s when they broke their 50+100 sma’s, and then it just caught fire. You’re right in that not seeing the effects in other income related issues at all. Just preferreds.

      1. NCSI:

        The big preferred ETF PFF down more than 2% today. Was down more than 1% yesterday. A huge move. Either one of these big ETFs got hit with massive outflows or a big player in preferreds decided to liquidate in a very illiquid sector.

        I was at 42% cash before today, so I have been buying like crazy all day. Like a kid in a candy store…locking in some great yields!

        1. Agreed, if you have cash to use feels like a good time to start putting it to work. Despite the sell off, I’m having trouble getting filled when I enter with size. Usually having to go to the offer and not getting completed. Suggests there may be air pockets in this thin market both ways.

    4. If the numbers hold through the close, it will be the worst day of the year for the canaries (low coupon, investment grade preferreds.) They are currently down -4.4%. I show 86 preferreds >$8.00 that are down -4.0% or more. I show 27 baby/terms down -4.0% or more. Too many to list.

      If you think this is close to a “bottom,” it should be a happy day being able pick up this many issues on sale.

      Pure guess is that tomorrow will be an up day if today’s numbers hold. Usually after bad preferred days like this, we get a positive day. Not a guarantee but statistically is true.

  24. I’ve bought SR-A (600 shs) today at 24.33 & 24.25
    On 8/1, I had sold 359 shs at 25.49
    AFGB 24.79 (65 shares) 135 still waiting at same price

  25. Not sure if anyone has an interest in this, but SA had a article today on the economic affects of the drought.
    https://seekingalpha.com/news/3875241-worsening-drought-seen-as-next-big-threat-of-economic-disruption
    Several of the comments were thought provoking if you held your nose and waded thru the dribble.
    Several months left before rainy season starts. Insurance was one topic discussed. I was surprised to hear how homeowners insurance in the mid-west had increased due to increased hail damage. It was mentioned Insurance companies believe enough in climate change to model for increased losses from claims and worry they hadn’t factored in enough.
    It hasn’t happened yet as far as I know, but building moratoriums could be in the future if cities put holds on any new hookups for water in the West and Southwest. If not this year, then next year if we have another dry winter.

    1. Thanks for the article. There are several moratoriums or restrictions on building permits along California’s central coast due to drought in places like Cambria, Los Osos, etc. We will try to get a building permit next year in Arroyo Grande. There are restrictions on water usage, especially for landscaping. Most yards are xeriscaped with drought tolerant plants. Many of my future neighbors have had their fire insurance cancelled or significantly raised (up to $3,000/month), and we are in a grasslands area with few trees. I’m designing a concrete house with a metal roof on the theory that I would rather spend my money on quality materials than fire insurance. If the drought gets worse, I might add extra solar panels and install an atmospheric water generator for our home use and to provide a watering trough for the local wildlife (coyotes, deer, jack rabbits, bobcats, birds, etc.). From a broader perspective, every place has some type of potential problems (e.g., flooding, hurricanes, earthquakes, snow/ice). We try to understand the problems and then adjust and adapt as well as we can.

    2. Today, Dane Bowler on SA, has an interesting one- CWCO Consolidated Water Co.
      Lake Mead / Powell supplies have to be reduced, so AZ, NV, and Mexico taking hits- guess which state has no cut? Yup – Calif.
      If Mead drops just a bit more, Hoover dam will be out of the electricity business – Vegas and parts of Calif going dark? Fun, fun.

    3. Re “Insurance companies believe enough in climate change to model for increased losses from claims” could, I think, be restated as “Insurance companies are consistently refreshing their models with data they collect on climate-related losses…” My point is that I don’t think “belief” enters into the picture: they collect and analyze the data, then react by increasing premiums to protect their float (as they’ve always done).

  26. Tex- Recent Terra stable coin blowup looks to have triggered regulators out of slumber cycle. Crypto bros are going to suffer a big liquidity rug pull due to banks requiring 1:1 ratio of collateral for each digital asset held.

    MAY 31, 2022
    The Basel Committee on Banking Supervision met Friday and discussed cryptocurrency, among other topics. The committee stated that it would soon publish its second consultative paper with the intention of finalizing guidelines on the prudential treatment of crypto exposure by banks by year-end.

    The committee began consultations on the banking sector’s risk exposure to cryptocurrency in 2021 and published a paper on its findings at that time. The committee divided crypto assets into two groups, with tokenized traditional assets and stablecoins forming one group, and all others forming the second. A 1,250% risk weight was assigned to the second group, which included all cryptocurrencies and their derivatives. That meant a bank was expected to hold $1 in fiat money for every $1 worth of cryptocurrency it held.

    August 18, 2022 – Canadian Office of the superintendent of financial institutions released guidelines. Looks like either raise capital ratios or dump your crypto into an illiquid market by Effective Date: Q2 2023.

    https://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/adv-prv/Pages/crypto22.aspx

  27. My partial plan of action for consistent,reliable retirement income includes purchasing IG , lower coupon issues that have 3-5 year call dates and trading at a discount from redemption value. Currently I am averaging a current yield on cost of approximately 5.6% with potential of significant capital gains if called. One of my goals is betting that interest rates will continue to rise for years to come without hitting extremely high yields like the late 70’s or 80’s, in which case my bet is that my current issues will not be called. Granted they may not keep up with inflation in this scenario, but hopefully will have a reliable income stream that does not wax and wane. Hopefully other investment vehicles will take up the slack in this scenario. I don’t really note any other comments that tend to concur with my strategy on this forum, but asking for input from the excellent thinkers on this site.

    1. glmpa – Do you see the inherent contradiction in looking for lower coupon issues with 3-5 year call dates, presumably for their “potential of significant capital gains if called” when you are also “betting that interest rates will continue to rise for years to come?” What’s to be the incentive for these issues to be called if your predicted outlook pans out?

      1. Not looking for the issues to be called. Thinking about the steady income stream from the investments. Ultimately if called ,I or my family will reap the potential capital gains. I guess I am thinking like many people who invest in the illiquid market for steady/ sock drawer income streams. Thanks for the input.

        1. I kind of agree w/ glmpa here.
          I hear much of high long term “rate risk”.
          But rarely does anyone mention the flip side of that coin: cap gains potential.

          IMO this creates a reasonably attractive risk/reward for at least a small portion of your portfolio, if nothing else as a hedge against a rapid return to lower rates (if you are otherwise positioned for long term high rates)

    2. glmpa;
      With a little patience, 5YR CD’s may well be at 5%. that is Brokered CD’s
      Certainly, consistent and reliable.

      1. But until that time, I’m collecting the potential 5% CD rate at this time and going forward. I am happy with my plan. For me it makes sense. Thanks for your input.

    3. glmpa, this is close to my plan for the same reasons. I think it comes down to what your objectives are. You mention consistent income that is also reliable. IMO lower coupons are unlikely to be called for some time and your underwriting is to buy investment grade which should help your longer investment timeframe. This checks those two investment objectives. And, if current yield is relatively the same to higher coupons from the same issuer, why not imbed a higher YTC if you are willing to wait anyways. Makes sense to me and is what I am doing at the moment. I also take Grids approach and sprinkle in a little bit of everything else to balance it all out.

  28. IMO, The HYG downtrend means more pain coming.
    The HYG takes a long time (sometimes years) to get to the bottom or top.
    I will try to reduce, even at a loss, or replace the Perpetuals with baby bonds and short term issues.
    I think the floaters are somewhat safer, so I won’t sell these.
    This last week showed me how quickly my paper losses can add up.
    Every 1% drop in fixed issues costs me 2-3K on paper.
    We’ve had 2 such days.
    Let’s see if the coming Weak changes the landscape.

    1. Hello Newman, glad I read some more of your posts farther down. Some of this takes a lot of time and study and some of it is luck.
      Hard to say what the future is bringing in the way of the market, interest rates, or economy. Lately I have been in F to F for exactly the reasons you stated. For instance some of 2whiteroses favorites CUBI E & F and BRG C & D.
      Most people think these are going to be short term holdings and will be called due to rates rising so are holding their price. Good place to park some money.
      I lucked out a month ago by looking at Tim’s chart on F to F and doing research on SA. I look at chart history for preferred that rise when their ex-dividend date comes then the stock price falls to a low a month or so later. I buy about a month out and when I sell taking my profit in the share price. This plan has been mentioned by Tim and over on SA. by others, works best in a steady market. Which believe it or not this year from about Feb. To June was just that. What I mean by luck, I bought DCP-B which has this type of chart and I am up about $2.00 then it was announced last week PSX wants to buy the company. I am going to hold now as I believe this puts a floor under the price and with it going floating in 9 months I am sure either DCP or PSX will want to call them. A calculated risk I am willing to take.
      Grid’s example NS- has a similar chart but is higher risk for flipping and I am not sure the company has the finances to call it But others here on III have been right more times than I have 🙂

  29. On Monday’s Tim posts his “Monday Morning Kickoff” and typically mentions the Fed’s balance sheet. There has been some pushback that while the Fed claims to be doing Quantitative Tightening (QT), the numbers make it appear that are still doing Quantitative Easing (QE). Former Fed employee Danielle DiMartino Booth has a good explanation for the seeming discrepancy on her site, with a guest post from former Fed Senior Trader, Joseph Wang.
    ******************************************************************
    Yes, Quantitative Tightening Really Is Happening

    The Fed is executing QT exactly as it promised, even if it may not appear that way. Fed data seems to indicate that they are not hitting their monthly QT targets (or maybe even purchasing more assets), but such conclusions reveal an inherent misunderstanding of certain details of the Fed’s balance sheet. This post seeks to dispel this misunderstanding by showing how Treasury Inflation Protected securities (TIPsa) adjustments inflate the size of the Fed’s Treasury holdings, and how the timing of MBS purchases settle obscure declines in Fed MBS holdings. QT is in train, and it will become even clearer when the pace picks up in September.

    Fed is Not Buying Treasuries

    The Fed’s Treasury portfolio continued to grow even after QE due to principal adjustments from TIPs, a type of Treasury intended to protect the investor from inflation by adjusting the principal of the security each month by CPI. For example, $100 principal invested in TIPs would be adjusted to $110 principal after a year of 10% inflation. The Fed’s $370 billion holdings of TIPs is increasing due to elevated inflation, which is also separately broken out as “inflation compensation.” That growth in turn shows up as small but steady increases in the total Treasury holdings.

    Since the advent of QT, Fed Treasury holdings have dropped steadily at a rate equal to the monthly QT cap. Fed Treasuries holdings decline discretely on mid-month and month-end because those periods are the time of month when most Treasuries mature. Mid-month and month-end are also the periods when newly issued Treasury securities are settled, allowing investors to easily roll over their maturing holdings into newly issued Treasuries. The Fed also reinvests any maturing Treasury principal in excess of its QT cap into newly issued Treasuries.

    https://quillintelligence.com/2022/08/05/no-shill-for-qt/

      1. Alpha, the part Tex mentioned “in September” is the key part. This is supposedly when it starts to happen…Assuming follow through occurs. I have heard a couple ex Fed members state it could raise yields 25-75 bps on long end. But then they also say its just a guess and they really have no idea how it will play out. We shall see I guess.

    1. Tex:

      I truly look forward to your always informative and invaluable Saturday posts on this website! Keep fighting the good fight…every minute, every day (for any Triumph fans out there).

      I have one investment guy I follow that remains adamant that the stock market (and many other asset classes that have recovered since June) simply can’t continue to go higher with that truckload of QT starting to truly hit this Fall and beyond.

      It doesn’t seem like any big mystery. QE heavily goosed stocks and all asset classes on the way up (we even had to invent new asset classes to find returns like cryptos and NFTs) and QT is very likely to do the opposite. Believes the move higher since June is a pure and classic bear market rally.

      It does truly boggle the mind that the Fed has any credibility left, but right now many investors simply want to believe that the Fed Heads have everything under control, will execute a perfect soft landing for the economy with either no recession or just a mild one, and that they will of course be back to cutting rates again sometime next year with new highs on the stock market and many other asset classes to follow.

      We shall see. Certainly have my doubts.

  30. Hey guys, I’ve been reading these pests daily and have dipped my toes in.
    Specifically the floaters.
    Question: Once an issue floats, how often is the rate calculated?
    Every 3 months, 12 months 5 yrs?
    I tried to find that in the Prospectus, but gave up.
    I bought starting positions in RZA, Cubi-f, NSS, Vly-pp and finally Argo-a today.
    Are recalculation periods diff on most issues?
    Thank you in advance

    1. Newman, first you need to see if preferred bought mentions the word “float” or “reset”.
      Resets ala Argo-A resets every 5 years and is fixed again for 5 years, before resetting again. Floaters generally are adjusted quarterly. The quarterly floaters from my experience generally set the following quarter payment one or two days prior to the start of next payment cycle. So generally around the day you get your dividend paid, the next cycle is set in stone.
      Remember many Libors will be going to SOFR by next summer which could change an anticipated yield one was expecting from Libor before it closes its doors for good.
      If you really want to make life easy for you, just sell everything and put it all in NSS, as NuStar posts it on this site well in advance of payment. This coming cycle next month was posted last time just days after previous interest payment. (Just joking about loading up here as you well know, ha)
      https://investor.nustarenergy.com/debt-information

    2. Newman, also “resets” or “resettables” based on my interactions use the 5 year Tbill. A utility one time used the 30 year bond, but unfortunately that issue was long ago redeemed. It works best to get those 2 terms down right from the start so you already know what you are delving into before further examination…
      Couple examples to practice with on resets…
      NI-B
      NiSource, 6.50% Dep Shares Series B Fixed-Rate Reset Cumul Red Perp Prfd Stock
      Ticker Symbol: NI-B CUSIP: 65473P881 Exchange: NYSE
      Security Type: Traditional Preferred Stock
      ——-ARGO-A
      Argo Group International Holdings, Ltd. Resettable Fixed Rate Preference Shares
      Ticker Symbol: ARGO-A CUSIP: 040128209 Exchange: NYSE
      Security Type: Traditional Preferred Stock

      Now floaters…RZA…
      Reinsurance Group of America, 6.20% Fixed/Float Sub Debentures due 9/15/2042
      Ticker Symbol: RZA CUSIP: 759351703 Exchange: NYSE
      Security Type: Exchange-Traded Debt Security
      ———-CUBI-E
      Customers Bancorp, 6.45% Fix/Float Rate Non-Cumul Perp Preferred Stock Series E
      Ticker Symbol: CUBI-E CUSIP: 23204G605 Exchange: NYSE
      Security Type: Traditional Preferred Stock

      See the difference in names? The words have meaning.

      1. Replying to Gridbird,
        I see some people on this site are most excellent at Comprehension.
        Yes, words have meanings but, let’s admit it, there are too many words.
        I’m too old for these words.
        I’ve used many words in my life, It’s time to have a garage sale.
        On sale is Debenture and Subordinate
        Also for sale is Pari Passu side by side with Par.
        We have a Make Whole somewhere in the back.
        Thanks for the quick reply.
        It’s Copacetic

        1. No, I didnt mean it in a smartelic way. I just meant they had meaning. If one doesnt know the “code words” one wont ever uncode the meanings. I didnt know either, and I had a person smarter than me explain it to me a couple years ago. Just paying it forward since many have helped me with the jargon stuff.

          1. Gridbird,
            Have I thanked you for BKEPP?
            Well, I owe you a dinner for that.
            I value your posts, as I do Tim’s, 2WR and a few others.
            Let’s see if I learnt something.
            Resets are longer durations than Floaters.
            Is that it in a nutshell?

            1. Newman, too bad they all werent shooting fish in a barrel like BKEPP isnt it, ha. Yes, the resets are longer FIXED duration, and they generally are an adjustment added to 5 year Tbill yield. The floaters are an adjustment plus generally Libor or SOFR (a more shorter term lending instrument).
              But remember just because it resets for 5 more years doesnt mean automatically its call protected for 5 more years. That would need to be researched. Some like say NI-B become call protected for 5 additional years, but some are not…. And with floaters they typically arent call protected once they float. Some like say the CUBI floaters are call protected to the next divi, but as 2WR mentioned earlier, RZA is becoming a floater but can be announced for a redemption notice on any day past original call date.

  31. Well finally my wife left the nest. She retired last year after 31 yrs with Costco. she has decided to start taking withdrawals after waiting a yr. and as a loyal (former) Costco employee was unhappy to find out in a company 401k they sell a little bit of each fund in the 401k AND some of the Costco stock. After two weeks of “discussisons” with me and the TRP advisor telling here it isn’t good to have 1/3rd of your investment in one basket it was decided to roll her 401k over to an IRA so she wouldn’t have to sell the stock. Of course she was only offered TRP funds but once it’s rolled over we can move out of these funds.

    1. It really pays to go read the terms/fees/rules of your 401K plans. Some are really good, but some are breathtakingly bad.

      I worked for a big company (Fortune 50) years ago that was charging the 401K plan administrator a big fee every year (i.e. having it pay the company), then having the administrator pass the fee on to the plan participants. Turned the 401K plan into a profit center for the company. It took a couple of lawsuits to get it fixed (and it resulted in some new rules from the government).

      The same company had a provision in their defined contribution pension plan that if you died before you started to draw your pension, the company got to keep half your balance. I stumbled across the term when I read the plan just after I left the company. I couldn’t believe it. I called the benefits folks for clarification, and they first denied the term existed, then when I faxed them the page, they offered no rationale for it. “its just a term of the plan”. I guess they just never expected anyone to actually read the documents.

      Needless to say, I got my money out of both plans immediately.

      1. Private, I just started drawing from a pension plan I have. Used to be with GP for 17yrs until they broke it up and the wholesale distribution division was sold to Bluelinx not happy a couple years ago they asked for a yr delay in funding the plan from the court or was it the feds. I had visions of the plan ending up under federal control if they went BK.
        Never thought to read the documents.
        Taking a couple weeks rest from this IRA stuff. Still full time job and that dealing with the wife was like working on a kitchen remodel deciding the flooring, cabinets, appliances, wall color etc.
        Need to build up the energy to go round 2 on setting up how we want the IRA actually invested. The 401K advisor at TRP hinted they frown on active traders. That’s not what I want to do, but I want her investments more balanced than being in funds that hold other funds of TRP. I know that must be how the fees are kept low.

        1. Hi Charles,
          Always worth looking at the plan documents. When I read the pension plan I mentioned, it was “paying” us something like 2% on our balances . It was a forced conversion from a defined benefit plan (in which we got screwed badly). In addition to the “we keep half” provision I mentioned, I found we could just roll-over our entire balance into an IRA. They made me jump through a lot of hoops to get the money (they insisted on doing everything by hard copy in the mail). I think the company liked using our money and only paying 2%. Anyway, I did it and never regretted it. Similar story with their 401K – they made it as hard as possible to roll over to an IRA, but I did so just to get away from their management.

          One thing I did as I was getting that that set up (~15 years ago, when I was in my 40s) that I haven’t regretted – I hired a (fiduciary) money manager to handle part of my holdings. My thinking was this:

          1. He is part of my estate plan. My wife will never manage investments. She is brilliant in her own field, but has zero interest in investments. She helped pick our manager and she knows and trusts him. I have suggested to her that when I die, she should just hand the whole portfolio over to him. It will cost her a little every year, but it will be worth it to have a trusted professional running things and for her not to have to stress about it.

          I started down this path because I had been asked by a few family/friends over the years to help surviving spouses unravel the investments left behind by deceased spouses. Some of the deceased had set up very complex investments and some had even left behind very detailed instructions on how to keep things going – but the surviving spouses were usually not equipped (skills or interest) to handle things. Huge stress on the survivors. I decided I didn’t want that for my wife, so I made a big focus of my plan to reduce the burden on her (both now and later).

          2. He is part of my “diversification”. In addition to diversifying my portfolio, I think it is safer for me to diversify my investment management. Chances are good that we won’t both make the same mistakes.

          3. He is my safety valve” I have “beaten him” on investment returns for all but 2 quarters since I started with him, but that is OK because I tend to take more risk than he does. The share of our holdings he manages is down to about 15%, but it makes me feel better to know that his part is on more solid ground.

          1. Private, A job is a job I guess. One of my golfing buddies wife was a broker and handled peoples financial accounts. She retired 3 years ago, and guess what? She sent all her investments to a financial advisor. She said she is done with handling money…including her own. Her husband doesnt have a clue about their finances and just worries about his golf game. He asks her for cash whenever he needs any.

  32. Re: BRG-C, BRG-D
    Unless extended the outside date for Blackstone Real Estate completing the buyout of Bluerock Residential is September 20 – about 4+ weeks away.
    In the meantime the next dividend is accruing. No complaints.

  33. I just posted in the I BOND section- seems like they made a smaller payment than they should have.
    Ideas appreciated.
    thx

  34. STAR-I and STAR-G – What are the odds that the merger of SAFE with its majority owner STAR is not going to go thru? I’d guess very slim. The merger calls for all 3 STAR preferreds to be redeemed upon closing and they predict the deal to close either late 4rth quarter or early 1st quarter of 2023. and yet both STAR-I and STAR-G (not STAR-D) are selling under $25 when taking into account accrued… I has approx .328 accrued and G, .334. There has been a seller in the market on both who’s been knocking out blocks on the bid side, so who knows how long that will continue, but on risk/reward basis of this deal closing as planned, they both seem cheap to me.

    1. 2WR:

      STAR common holders may not be that happy with the timing of the combination, but don’t think they will vote against it. SAFE holders would be foolish to vote against it, as it is a very favorable deal for them that generates enormous fee income.

      If you go through all the debt on STAR’s balance sheet and value their 40+ million SAFE shares at $44, $18+/share for STAR is about right. It is just very difficult to value the remaining non-ground lease STAR assets, since they are mostly made up of master planned communities Asbury Park and Magnolia Green – which won’t realize full value for many years.

      Obviously, the better time to do this deal for STAR shareholders was when SAFE was trading at $65+. Another $20/share higher for SAFE would have been worth another $10/share for STAR holders.

      STAR holders just got hurt on the unfortunate timing of the deal – which occurred after SAFE common had fallen 40%+ YTD.

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