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Sandbox Page

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

That link will get you to this page.

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

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

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

1,410 thoughts on “Sandbox Page”

  1. I get this email alert every Friday from Fido on the upcoming Treas auctions for the week….. I understand the 6 month is going to be oversized this week… It’s also interesting to see a 2 year auction this week.. That might fit into a lot of III’ers interests.. I also see the same kind of info at TDA however, be aware that TDA always has earlier in the day cutoff timing so better check if you want to participate.

    Fidelity Alert – Fixed Income Offerings

    Fidelity is pleased to announce the possibility for Brokerage customers to participate in next week’s U.S. Treasury Note/Bond Auction(s):

    USTMaturing 11/09/2023 Auction Close Date: 09/26/2023

    USTMaturing 12/28/2023 Auction Close Date: 09/25/2023

    USTMaturing 03/28/2024 Auction Close Date: 09/25/2023

    USTMaturing 09/30/2025 Auction Close Date: 09/26/2023

    USTMaturing 09/30/2028 Auction Close Date: 09/27/2023

    USTMaturing 09/30/2030 Auction Close Date: 09/28/2023

    Bill auctions close at 10:00 a.m. ET. Note/bond auctions close at 11 a.m. ET if there is only 1 note/bond auction during the day. If there is more than 1 note/bond auction during a day, some will close at 10 a.m. ET while others will close at 11 a.m. ET.

    1. Win or lose 2WR, I already put a small 10k order in for the 2 year on Tuesday. Impounding more dough in safe can’t touch it Treasuries.

    2. 2 year Note auctions happen once a month, in the second half of the month. 1 year Bills happen once every 4 weeks, which is not once a month unless you were born in February, just to keep you on your toes. 3 month and 6 month are weekly. The Treasury puts out a general calendar and a specific listings at Treasury Direct. I think it is easier to look at broker offerings. Treasury also puts out auction results PDQ same day if you are curious about what rate you got.

      As noted by 2WR, be sure to observe your broker’s order cut off time. Auction day is a bad day to oversleep.

      Also, be aware of your broker’s order cancellation policies (when and how, on line or by phone) if you practice Poor Man’s Arbitrage and put in simultaneous orders for, say, a Treasury Bill, a selling-out-fast CD with a distant settlement date or perhaps an upcoming new bond issue, while you go shopping around for better deals.

      Lovely to look at. Delightful to hold. But if you forget to cancel, we’ll mark it “Sold.”



    1. So it looks like my holding of MS-E will become a perpetual fixed security paying 7.125% indefinitely? I can likely live with that, at least for now.

      But if rates continue to go up, this could well be adversely affected, like all the rest.

  2. Schwab CDs today ~ all NONCALLABLE for DURATION

    1YR ~ 5.55%, CITI, 17312Q3Y3, 9/27/24, pays at maturity
    2YR ~ 5.35%, INVESTAR, 46091MAQ7, 10/3/25, monthly
    3YR ~ 5.1%, CITI, 17312Q4A4, 9/29/26, semi
    4YR ~ 4.85%, UBS, 90355GGNO, 9/27/27, monthly
    5YR ~ 4.7%, UBS, 90355DEN4, 9/27/28, monthly
    10YR ~ 4.45%, HORIZON, 44042TCQ5, 10/12/33, monthly

  3. US Debt & stuff

    * Now over $33,000,000,000,000
    * That’s $255,000 per US taxpayer
    * That’s $98,500 per US citizen
    * 9/30 budget impasse looms over DC
    * UAW expands strike to 38 more facilities
    * Border here in Texas is being overrun with immigrants so much that charter buses & airplanes are working 24/7 to export the mass of humanity to other cities ~ DC needs a plan or this issue will only worsen

      1. David ~ no politics intended ~ just stating facts about our current surge in Texas that is overwhelming our border cities & now sanctuary cities.

    1. Step 1 – stop consuming social media, nightly news, and fud.
      Step 2 – go down to your local library. Find out many great works exist for the cost of $0. Enjoy the 38 something librarian stocking the lower shelfs.
      Step 3 – go home with a smile on your face everyday.

      1. Thanks for making my day with this post, Micah. Yes to local libraries and all they offer!

  4. I’m amazed that Preferreds have held in so well today. TLT is down over 2% yet most fixed perpetual Preferreds aren’t down much.

    Either the market is sleeping or the demand for higher yield is so strong, it creates a floor.

      1. TLT ~ Just plummeted to 14 year low at $90.94; if one thinks future cuts are coming, might be an interesting play…but that may be quite a while!

        1. TBT is the place to be in rising interest rate (LT) environment. Its up 4.85% today. I used to play this one before I gave up betting on interest rate movements.

  5. 10YR – 4.43%….if oil continues rising, almost all sectors of the economy & market will be affected & the FED may end up battling rebound inflation. Will we get to 4.5% with another hike coming in 2023, time will tell!

    Have a great day!

    1. 12 Fed members forecasting a rate hike. 7 are not. If 3 of the 12 change their mind then no hike. Pretty good indication that we are close to the end of rate hikes.

      1. SteveA ~ the hiking cycle may be near an end as you mentioned, but if inflation continues rebounding with oil prices rising, all FED bets for stopping hikes would be off IMHO.

  6. Well, took my RMD in-kind as SGOV money mkt that I had in the IRA.
    Now I can begin to implement conversions to my ROTH of some of my deflated P’fds, notes, and a couple stocks – in hope they can recover and rise in price, continue paying or repay suspended
    divs etc.
    Any suggestions on some ‘safe-ish’ BBs or preferreds for some of the cash?
    I can also just keep it in SGOV or CDs until the market sells off again, or the yields drop too low. Not my first RMD!
    What are others doing with the RMDs?

    1. Gary;
      Pay yearly bills: property taxes, property insurance, auto insurance, medi-gap and part D ( pharmacy) policies for the year, 1/2 of granddaughter’s fall semester tuition at San Jose State, if any left I will go to Las Vegas next month and try to get some of it back 🙂

    2. This year, my RMD is the same as I’ve budgeted for living expenses. We’re letting my wife’s RMD just languish in her account as cash while we figure out a plan. After all, Fidelity is paying her just short of 5% for accumulated cash. As I’ve mentioned here, with some of the excess, I added more GDVprK.

    3. Does that mean you just instructed your broker to move what you had in money markets to your taxable account? Is there any benefit to doing that instead of using cash to go to it? I’ve still about about 1/2 or my RMD that I have to do with intentions of not doing it until Dec.

      1. I don’t have much in cash and fixed income. Issues paying higher rates offset by higher risk. l’m a trader, if I can boost my return with trades by even a small amount it’s well worth the risk. No 5% for active traders.

      2. 2wr-
        For me, moving a 5% or so earner is better than selling it to move cash to the taxable acct- why would I do cash unless I needed it right away?
        At Schwab you just go to “Transfer Funds’, pick the IRA & enough to meet the RMD- in cash & or stock. I did stock-SGOV and $52 cash to make it a few cents past the req’d amount. Schwab is a bit sneaky tho- if you go to the Take My RMD tab, it just says cash amount- good for them, not me.

        1. I’m guessing then that what you describe is a Schwab grown trait because there’d be an additional step on both sides of the transfer to move cash directly for you, right? In other words, at Fidelity my cash is in any one of a few high yielding money market sweep accounts. I don’t have to put cash from a sale of something I own in MM fund, it goes there automatically So all I have to do is a cash transfer at FIdo to move RMD funding from one sweep account to the other directly…. Schwab, from what I’m getting used to with TDA funds and by what you’re describing, doesn’t allow you to do that unless you do what you’ve done, and transfer the money market fund (aka SGOV) directly to the taxable account. So it’s the same thing I think, only you have to designate a fund to fund transfer and I don’t…. Yes?

          1. 2wr-
            No like I said- it is either cash, which I could have done (altho it is earning money with SGOV) or stock or a mix. Not really more involved if for some reason you just have a lot of cash sitting there doing nothing before transferring to the taxable acct
            Not sure I’m getting thru.

      3. There is no advantage to an in-kind distribution unless it’s an illiquid asset (or just something with a large spread).

        And I don’t see much point to taking a distribution now if you are just going to keep it in something cash like on the taxable side. Just wait until you need it, or December.

        Also you probably want to be keeping cash in fully taxable funds in the IRA (e.g. SWVXX), but maybe a tax advantaged fund in the taxable account (e.g. SNSXX).

        1. David-
          1) I wanted to do the RMD now since I have to do it before I can the conversions as noted before, and will be doing several before the end of the year.
          2) SGOV is gov’t paper- just as SNSXX, SNOXX, etc.
          3) No state tax in NV- a non issue, if that is what you were getting at.
          4) I might convert some in the taxable to stock for income, and use some of it for personal wants or gifting.
          also- I have almost 40% in such things as SGOV and CDs for now- sometimes SNOXX- biding my time.

        2. I like to do my RMDs before December. Just one less think to worry about at year end – and my broker (Schwab) doesn’t always get it right.

          I don’t do the online transfer for RMDs. I make them do it. That way if there is an error, they have to fix it.

          Honestly, couple of years ago, I sent a message for them to transfer X shares of one stock, plus Y shares of another stock, and to use cash to “top up” the transfer to equal the RMD amount. They couldn’t do it. Sent me a message to call and talk to the guy at extension xxxs.

          I called and literally had to walk the back office guy at schwab through the math step-by-step while he did the transaction in my account (OK, move the X shares. How much is that? now move the Y shares – how much is that? now, add those two together. Now subtract that from the total RMD. That is how much cash you need to move). Felt like I was helping a third grader with a word problem in his homework. At least he called instead of just guessing and getting it wrong.

          Another year, they did the transfer and just got it wrong – and it took several calls to get them to fix it.

          1. Private-
            That’s sadly funny. I can hear them ” Sir- you told us by phone just what to do- if it’s wrong, that’s you’re fault.” Can’t win 😉
            doing it online it has several checks of what you are doing – number of stocks and that value, then cash and total. Pretty safe.

            1. Thanks, Gary.
              I guess I should have gone and looked at the current system before I shot my mouth off.
              It sounds like a vast improvement from the system I looked at (years ago).

              Maybe I will try it out next year.

      4. Some brokers (like Schwab) won’t let you transfer shares in money market funds to another account to satisfy the RMD. They make you sell in the retirement account, transfer the cash, then repurchase the MM shares in the receiving account. Since the price stays at $1, there isn’t a risk, just a hassle. I went round and round with them a few years ago about it and they just won’t budge.

        That said, you can transfer just about anything else “in kind” to meet your RMD obligations.

        I move stocks, baby bonds, etc. every year to meet my RMDs for my inherited accounts (I am still too young to have RMDs on my IRAs, and if congress keeps raising the age, I may never have to pay them!).

        I think I have finished my RMDs for this year, but I need to check.

        1. Yes- I did an ETF transfer-SGOV, haven’t tried mmarkets. Strange that they think the money mkt might be a problem (?) given that it is fixed at $1 – but my guess is they just want you to keep invested in it and sell something else – letting them hang-on to your cash. Of course, if they just transferred it, they’s still have your cash- odd.

        2. This is not accurate. MMFs are not marginable for 30 days after purchase (regulatory requirement). As far as I can tell, the Schwab restriction is that during the 30 day non-marginable period, you can’t transfer the MMF position from a non-margin account (e.g. IRA without limited margin) to a margin account. It doesn’t exactly make sense, but it doesn’t seem like a serious issue either.

          1. Hmm, it turns out you can’t transfer an MMF from any account to a margin account during the 30 day period. I think this may be a recent change.

            1. I think it is part of Schwabs love/hate relationship with MMFs. They sell MMFs, but they really don’t want to make them easy.

              By not letting you transfer, they can make you sell it in one account, transfer cash, then buy in the other account (restarting the no-margin clock)

              Schwab’s biggest source of income is from investing all the cash sitting in peoples accounts. If people put their cash in MMFs, Schwab loses revenue – so they make MMFs difficult.

              Last year they changed their rules about how they “count” cash in your account that is available to purchase MMFs.

              -Used to be that if you had open orders (backed by MMF funds) and you received cash into the account , you could buy more MMFs with the cash (i.e. they put the new cash “on the top of the pile of assets they are looking at to back orders”, so it let you use the new cash).

              -The new rule is that if cash comes into the account, they “re-count” it against any open order (i.e. slip it to the bottom of the pile assets they are looking at to back open orders) and you can’t use the cash until there are no open orders. In other words, they now always count cash in an account first against any open order.

              So, you can only use that cash to buy MMFs if you have no open orders “tying up” that cash. If you have any open orders backed by MMF funds, and you receive cash that you want to put into MMFs, you have to cancel those open orders, then buy the MMF, then re-enter the orders (once again backed by the MMF funds).

              It is just another way to raise the “hassle factor” of MMFs to get you to leave more cash in the account that they can invest for themselves.

              It works.

              I used to have a little bot that swept all of the cash in my schwab accounts into MMFs every day at market close (one of my kids wrote it). Now, with all the hassle of canceling and re-entering orders, I tend to leave small cash balances in my accounts because I am too lazy to do everything required to buy MMFs with them.

  7. CHSCO has a call date next week 9/26/23 and trading at 26.64 almost a full year’s worth of dividends for an issue that matures in 6 days! Anyone hear anything about CHS redeeming this issue? CHSCP call date was in July but is still trading at a 5.6 dollar premium over par.

    1. AJ – it does not “mature” in 6 days. It’s not even callable in 6 days as it’s callable only upon a minimum of 30 days notice. That doesn’t change your assumption that theoretically a shareholder is at risk of a loss if called asap, but facts are facts.. Also with CHS press release https://www.chsinc.com/about-chs/news/news/2023/09/12/equity-release most likely risk of call should it impact this one in particular, will not be until some time in 2024

      1. CHSCP seems to be the most obvious target for a call given that they have allocated only $375 million for equity repurchase and this one has the highest rate. The variable rate resets might be safe unless they make a ton of money again and decide to allocate more money to call more issues. I don’t have any of that one but I’ll keep holding my O, M and L issues.

        1. AJ,
          Just to expand a tiny bit on what Tim said.

          CHS is not a corporation or a partnership. It is a farmers Co-op, so things just run differently.

          It was kind of a surprise (to me) when they got into the energy business a few years ago, and it really pulled them down financially for a few years. Seems to have finally started to pay off.

          They are in the midst of trying to change their by-laws to adjust how equity is managed (both issuance and redemption). That is not a problem public companies ever see. Its interesting to look at the videos, etc. trying to explain/lobby for the changes. Co-op management is trying to convince many thousands of farmers (probably the most suspicious, “how are you planning to screw me?” group of people in the country) to go along.

          I hold/have held several of their preferreds and I plan to continue to do so.

    2. All of the CHS issues are ‘perpetual’ and they never have to be called. This is an old debate–the original old 8% issue you reference was held by CHS farmers (owners)–of course who owns most of the shares now isn’t known. CHSCP was issued on 1/28/2003 with a optional first call date on 2/1/2008—which the board of directors extended to the current date of 7/18/2023

  8. There has not been a lot of chatter in recently on the CUBI-E and CUBI-F preferreds. I see from the CUBI website the news release concerning the juicy dividends just paid a few days ago and that they are switching to SOFR for the December dividend calculations. Not a word about calling these two at all. I own CUBI-E for reference and entertaining a thought one of these may be a short term parking place for the WFC-Q funds I just got back when it got redeemed. However, I hesitate to add to my holdings particularly because it would be more than I care to have in one pot AND the bank crisis can rear its ugly head again at any time. Currently both of these are priced a few cents below par. What’s the thoughts are CUBI redeeming these in the near future and anybody else entertaining using them for a short term park of funds. The dividend is sure up there!

    1. Prior to the banking crisis, CUBI would frequently espouse the benefits to common holders of them redeeming the remaining preferreds. I remember them even quoting an amount/share that it would add. However, that was taken off the table with the crisis and there’s been no hints of redeeming in well over a year…. So I guess all you can say is that they do have the preferreds in their sites, but I doubt you’ll see redeeming being addressed anytime this year at least….

    2. The CEO was explicitly asked about the preferreds on the last earnings call. He said there were no plans to call them in the near future.

  9. MIDDAY UPs & DOWNs….


    10YR ~ 4.35% intraday high, highest since 2007
    2YR ~ 5.101%
    OIL ~ 12 month high
    WTI ~ $91.93
    BRENT ~ $94.78
    AAA Gas ~ $3.88
    30YR Mortgage ~ 7.3%
    Dogs of Dow barking loudest ~ WBA 8.69%, VZ 7.93%, MMM 5.97%


    DJIA ~ (-250)
    NASDAQ ~ (-75)
    US Housing Starts ~ LOWEST since 2020

    1. CCLDO went down a lot on Monday but CCLDP did not go down much.
      Tuesday, CCLDP fell almost 32%, perhaps because people got spooked about CCLDO on Monday. There seems to be no reason. Could this just have been a large holder of CCLDO dumping on Monday, with people seeing it fall following out of CCLDP on Tuesday? Any other explanation? If there were a fundamental reason, it seems like both preferreds would have done down on Monday together.

  10. I emailed CHS about their plans for the two CHS soon-to-float preferreds (CHSCM and CHSCN).
    Their Director of Finance replied:”CHS intends to comply with LIBOR act when we reprice.”

    It’s unclear to me what that means, as complying with the LIBOR act encompasses a range of outcomes, as we’ve seen (PMT, MS, ET, STT, NLY, etc.).

    CHSCN and CHSCM have fallback language, and if they go with that, it appears they’ll use these replacements:
    a. CHSCN –> 2.802% replaces 3mL (so coupon = 2.802% + 4.298% spread, subject to maximum coupon = 8%).
    2.802% plus 4.298% = 7.1% (matching the current coupon)

    b. CHSCM –> 2.595% replaces 3mL (coupon = 2.595% + 4.155% spread (subject to 8% max coupon)
    2.595% plus 4.155% = 6.75%, (matching the current coupon)

    By the way, it appears they’ll fix the floating div annually rather than quarterly.

    1. Aren’t they supposed to be repricing in 2024, which is a way off?
      “”By the way, it appears they’ll fix the floating div annually rather than quarterly.” – I don’t read it that way. If you are looking at “Annual rate” that sets the ~APR or applicable interest rate for the period not the length of the payment period

      From the CHSCN prospectus summary (more intricate wording in Description of the stock)
      “…excluding, March 31, 2024, and thereafter, at an annual rate equal to three-month LIBOR, as determined for the applicable quarterly period, plus a spread of 4.298%, but in no event will the sum of such annual rate and spread be greater than 8% per annum. ”

      Just my opinion.

      1. BearNJ, thanks. I agree with you. Annual rate refers to the coupon, not the length of the payment period.

    2. So if they decide to use the fallback rate of 2.8% and not use SOFR instead of LIBOR the reset rate will stay the same forever since they’ll never have another LIBOR quote. The issue will technically become fixed rate. They should clarify that instead of saying they’ll comply with the LIBOR Act. They know what part of the Act applies to them.

    1. Yeah – I went a few rounds with ‘co-author’ (ha) Phillip Mause. He & R(?) kept saying the US was not a major importer of oil anymore since we were a big producer and exporter. I gave him all the numbers from eia.gov, but he was stuck with his statements.
      I have no interest in oil stocks, but playing with facts- that’s another thing.

      1. Gary, yes, what we produce and what is able to get refined here on our soil are 2 different type of oils. Largely a team of amateur wanna be financial guru hacks. What investing forum dedicated to retiree income would recommend WPG bonds that go bankrupt weeks later or 2x levered notes that blew up to nothing. Rita Moron is definitely an expert. But unfortunately its in separating people from their wallets.

        1. Yes but keep in mind that the author of this article dabbles in stand up comedy as an avocation… how apropo………

    2. msn.com looks like a robot aggregation page where they talk with other websites to allow content to be displayed on their main page. There is little to no thought what goes on it. The websites agree to show a small blurb on msn.com and they hope people want to read further bringing more traffic to them as well. Everyone wins with ads and views.

      I feel dumber now for even looking at msn.com


      1. FC, Why I prefer reading articles on Yahoo finance. But same thing, they try to show articles that after a few free views you have to sign up and pay. Yahoo is experimenting with a premium offering trying to get a pay for view model going. Problem with Yahoo is they don’t update so a limited number of articles. The Yahoo search engine is superior to MSN. Just my two cent observation. When you search a stock symbol on Yahoo, it also displays similar stock symbols on the lower right, making it easier to research say a group of pharma companies or say various utilities. MSN finance site wants to suggest the stocks with the highest volume or meme stocks. Completely useless for a dividend investor.

  11. For those scoring at home, ALL-B end of month interest payment has been posted on a few sites finally. Sites showing .558 cents ($2.23 annualized) for an ~8.74% annualized off present pricing of $25.54.

    1. Grid, any rumors of it being called yet? I know All State along with other insurers had a bad year with losses. Maybe they could float a new issue to call this one, but I wonder if they can do any better on interest rates.

      1. Near term I bet we are fine. You saw their last perpetual plus 7 yield and Citi’s almost 8% issue. Tough IPO market. Back out the accrued tax deduction and this issue is just as cheap as their last perpetual. Plus it has a low adjustment so it could drop in time. I think market conditions will require patience on their part.

            1. Thanks!

              Hmmm…not seeing that cusip show up at my brokers. Perhaps 144A?

              Oddly, not seeing any trace of the cusip in google. Haven’t searched Edgar for that CUSIP though. Do you have the FWP prospectus?

                1. Hmm, I wonder if the Preferred C-N would be at risk of being called in this event?

                  Should I lighten my position? I have 300 shares, at average cost basis of $29

                  1. Inspy,
                    I wonder that too.
                    There was a discussion not so long ago on C-N’s chance of getting called, but have been unable so far to find the thread. I seem to recall someone stated that the CFO (?) explained that Citi would never redeem C-N, but I forgot his reasoning. If anyone remembers the discussion, please share. If possible, I’d love to find his comments in the transcript of that conference call, but so far haven’t found them.


                    1. mbg,

                      I seem to remember that someone posted that Citicorp would lose a significant tax benefit if C-N were to be called, but my memory is poor.

                    2. Here’s what I have in my notes on C-N – https://www.barrons.com/articles/citi-preferred-stock-dividend-7a338456

                      An unusual Citigroup preferred stock issue has an outsize current yield of about 10% at a time when most preferreds from big banks yield in the 6% to 7% range.

                      The $2.2 billion Citigroup Capital Series XIII issue, which is publicly traded on the NYSE as C Pr N, is a special type of preferred known as a trust preferred securities, or Trups. The Citigroup Trups were issued to the federal government in the wake of the financial crisis, and Treasury then sold them into the public markets in 2010.

                      The situation involving the Citigroup issue and why it remains outstanding when Citi has to pay so much more interest on it than on other securities is both complicated and a little mysterious.

                      The interest rate on the issue floats, or resets, quarterly at 6.37% percentage points above LIBOR, the London interbank offered rate, a key short-term interest rate now around 5%.

                      With short rates rising, the rate on the preferred is now about 11%, up from 6.5% in late 2021 when short rates were close to zero. The current rate compares with a rate of 7.375% on a new Citigroup preferred deal issued earlier this year that was geared mainly toward institutional investors.

                      The effective yield on the Citigroup Capital preferred is a little under 10% because the shares trade at nearly $28, a more than 10% premium to the face value of $25 a share. Most preferreds are issued at $25 and now trade around that price or at a discount. There are 89 million shares of Citigroup (Ticker C) preferred outstanding.

                      Few, if any, preferred issues from top U.S. banks yield as much—and neither do their bonds. Given the high yield, the Citigroup preferred has been one of the better-performing issues in the $400 billion preferred stock market.

                      The high yield, however, comes with risk. Citigroup can redeem the issue for $25, which would result in an immediate loss of about 10% to holders.

                      Despite having to pay such a high yield, Citigroup has opted not to redeem the preferred since it could do so in 2015. That has encouraged investors to believe that the bank will leave the preferred outstanding, perhaps until its maturity in 2040. Why?

                      The company has said in the past that it would be uneconomic. Due to a quirk in accounting rules, the securities are carried on Citigroup’s balance sheet for about $1.5 billion, not their face value of about $2.2 billion. A redemption would cost $2.2 billion at the face value of $25. This would result in an accounting loss of more than $700 million.

                      “If we were to redeem this, we would take a large hit to our P&L. And that’s just the way that the bookkeeping has worked on that security,” said Citigroup chief financial officer John Gerspach in 2017 on a conference call. “The decision to redeem that security is largely an economic one. Is it worth taking a large loss to redeem?”

                      In a statement to Barron’s, Citigroup said: “As we’ve stated in the past, due to this grandfathered security’s carrying value on the balance sheet, it’s more attractive economically to leave it outstanding rather than to call it at this time. We continue to assess this on an ongoing basis.”

                      There’s a big difference between Citigroup’s trust preferred, which counts as debt, and regular preferred stock, which is a senior form of equity. Citigroup pays interest on a subordinated debt issued to the trust, called Citigroup Capital XIII, which then passes on the payments to investors. This benefits Citigroup since the interest payments are tax deductible, unlike preferred stock dividends. The investors get no tax break on the Citigroup trust preferred dividends unlike those on most regular preferreds, which makes retirement accounts the best place to own the securities.

                      Bank regulations passed in the wake of the financial crisis disallowed trust preferred as a component of Tier 1 bank capital but grandfathered the Citigroup issue. This gives Citigroup an incentive to keep the preferred outstanding.

                      The effective cost of the preferred issue is lower than the current 11% rate for Citi since the distributions are a deductible interest expense, which reduces the cost to under 9% (assuming a tax rate of about 20%). Still. the tax savings aren’t large enough to make them less expensive than standard preferreds, whose dividend payments aren’t deductible.

                      Citi will be shifting the short-term benchmark for the trust preferred from LIBOR, which is being phased out, to SOFR. The new spread above three-month SOFR will be 6.63 percentage points, 0.26 percentage points more than it is now.

                      High yields come with risk. Investors have done well holding the Citigroup Capital XIII preferred in recent years but there’s no guarantee Citigroup will keep it outstanding. The bank’s unwillingness to redeem the preferred does offer some comfort to investors.

                      “It is one of the few preferred stocks in the market benefiting from higher interest rates, because it floats with SOFR,” says David King, co-manager of the Columbia Flexible Capital Income Fund, which has owned the Citi issue for some time. “Although it trades above its call price, which is a potential risk, we don’t expect Citi will call it soon, due to regulatory consideration of increasing capitalization requirements for all banks after recent regional bank failures,”

                      Maybe that’s comfort enough.

                  2. Despite whatever reassurances a company offers, I would never own a callable preferred that is trading at $29. If they changed their mind, that’s a $4 screwing. AFAIC, no dividend is worth that risk.

                    It might have been Grid that mentioned what the CEO stated. And if not, there’s a good darn chance that he knows about it anyway.

                2. It shows up as a Cusip in the Schwab bond search by Cusip. Currently unavailable. Perhaps it will be tradeable on 9-21 – the settlement date?

                  1. Schwab will often list bonds that way when they don’t have any “in stock”. I think they do that in the hope that you will buy something that they do have.

                    You can often get issues that don’t show up if you call the bond desk during their business hours.

                  2. On Schwab, this looks exactly like WFC Series EE which is not publicly traded. I believe this Citibank issue is also designated as not publicly tradeable.

                3. Thank you @2whiteroses

                  Managed to buy some of this 172967 PE5 for IRA account by calling Bond desk. Still not sure if this is a corp bond that will trade on the exchange or will need to call bond desk (human) to trade it again.

                  Will add if it lists and can buy without bonds desk call as 7.625% yield and not callable for 5 years is pretty decent

          1. Somebody posted it here last week. Its a $1000 preferred if memory serves. I never persued anything past what I read here.

    2. It’s end of month October, isn’t it Grid? I guess that number includes 2 extra days in the quarter because as I figure, SOFR was 5.31105+.26161 = 5.57266%…. With ALL-B’s + 3.165 that should mean that the coupon set to begin accruing on 7/15 was to be 8.73766. but to get to .558 you’d have to add two extra days to the daily amount or accrual based on a 360 day calendar convention…. All minutiae though…. Also of note, if SOFR remains unchanged between now and October 12 approx and ALL-B remains outstanding, B’s payment will go up by about 8 basis to 8.828% from this quarter’s payout of 8.73766…

      1. It goes exD end of month. Payment mid Oct. I only worry about exD. You work too hard on figuring that stuff out. It is what is and they will let you know. Use the extra free time to become a master of your cell phone so you can teach me, ha.

          1. 2WR – just go get a 16 year old girl to teach you how to use your phone. You will get the bonus of making your wife really suspicious. That’s always fun!

  12. https://www.morningstar.com/news/marketwatch/20230915721/ex-bank-exec-gets-six-months-of-home-confinement-and-probation-for-wells-fargo-fake-account-scandal

    And how much pay and bonus money did she get for their robbery? They asked for only 1yr in prison, and will serve zero.?? At least she has two big fines to pay- maybe? Love the $65 million clawback- should have gone to customers, not WF. Supposedly WF was fined billions.
    But, the big boys-
    ” While former Wells Fargo (WFC) executives, including former Chief Executive John Stumpf, have been banned for life from the banking business, Tolstedt is the only executive thus far to receive a criminal sentence and face the possibility of jail time.”

  13. I noticed NuStar redeemed the rest of
    the Series D this week. Some of the monies used is still on the revolver that needs to be cleaned up. Hopefully that will bog them down a bit, because next man up (or redeemed) could eventually be something I don’t want redeemed.

    1. Grid, where did you see this? I just checked their site and couldn’t find anything. This is great for the company but bad for me and you. I own the preferred and more of NSS. I was expecting them to complete this late in 2024. Cheers

      1. It’s in a NuStar SEC filing. A link in my Schwab account displayed it and I read it. I’m not smart enough to link it by phone. I don’t have access to my iPad being trapped in car heading home from Northern Michigan. A chunk of the last redemption came from a secondary common unit offering and the rest by the revolver.

          1. I don’t like answering my phone, 2WR. I infuriate my lady by just letting it ring. I just text back instead, ha. It’s hard to know which is next man up. There may be a tax bene for NSS as bankers already wave it as equity capital. I got a 50/50 split with it a C. Used to have B and flipped on some rises. It’s likely the safest but trading near par it’s the lowest yielder too though.

            1. You’re saying there a possible tax bene to NS to leave it outstanding v attacking C first, right? That’d be my guess but didn’t really know if the subordinated aspect might have changed that equation….. For me as a K1 hater, splitting between NSS and NS-C is not an option….. and ha! if making a call is too difficult for me then answering is even worse…. Swipe right swipe left swipe up swipe down, who knows which? Why can’t I just press an answer button?

              1. A subordinated note is basically equity except the company gets the tax break. Accounting wise I don’t know how that works with MLPs though. Since NSS is totally waived as equity, it makes the case for the highest preferred to go. But that is just simple C Corp math and I don’t know if it is for an MLP. Or if anything else is more important to the company to redeem or not redeem anything. It’s still a levered entity.

                1. Thanks, Grid and 2WR. I also don’t answer my phone. The fact that NS had to do this from a common stock offering and revolver draw gives me hope that we make it to the second half of next year

                  1. Eric, I think we are ok near term. At some point I may have to evaluate NSS if it continues to stay a fair chunk above par in relation to the sister preferreds.
                    I am not averse to K-1s as Turbotax does it basically for me. But I am not doing anything near term.

                2. I don’t anything about MLP internal accounting, but (as several CFOs have told me) I know just enough accounting to be dangerous – and I think you already know what I am about to say, but I am once again sitting in a waiting room, so I will write it anyway:

                  The benefit of debt is that the payment of debt interest is a tax deductible expense. Payments on equity (dividends and distributions, for example) are not deductible for tax purposes.

                  It sounds like NS got some regulator to agree that it can count NSS as equity (for some regulatory purposes), but it remains debt, so payments are tax deductible. Sweet deal, when you can get it.

                  A bunch of banks did similarly back in the financial crisis 15 years ago, and during the Savings and Loan meltdown 10 years before that.

                  Most CFOs have little incentive to replace deductible debt until its “tax-benifetted” cost is higher than whatever they would have to pay for “replacement”equity.

                  1. Private, let me add a little admitting I know little either. As far as NSS is concerned, there wasnt any regulators involved who waived the debt, it is the banks doling out the cash from the revolver (which is the big enchilada senior debt) that waived it. This was done if memory serves when basically it was issued as they were headed for the crapper during this time from poor investment decisions.
                    Now the credit agencies still view it as 50/50 (debt/equity) but that is no biggie either considering most preferred stock is viewed as 50/50 debt-equity also by rating agencies. Subordinated debt as I frequently lament is really debt masquerading as preferreds anyways being it really holds no recovery value more than likely in any insolvency event with any company…. Also, it typically gets forgotten by most here, but NSS is not NuStar (NS) debt. It is subsidiary debt from NuStar Logistics. I dont know if this calculates into their decision to redeem or its impact either way. The preferreds (NS-C, etc.) are holding company preferreds from parent NuStar (NS).
                    Secondarily, its not like this company can issue a Microsoft preferred and incur big savings. We just seen what Citi had to pay and their credit rating is a lot better, plus it doesnt have the stigma MLP preferreds have which means higher yields anyways.
                    Cost of capital going forward is still prohibitive for them. They issued a lot of common units to assist in redeeming the Series D. Cost of capital on the common units is presently over 9% anyways. The weighted average of the revolver credit was almost 7% end of ‘22. So it cant be lower now being its floating SOFR debt. Being its the “lifeline” and has covenants to protect it, the focus likely will be to clean that up first.
                    They certainly dont want the stigma of cutting “dividend”, so its likely they have no near term goal to do anything with any of the preferreds or the note. And maybe just focus on cleaning up balance sheet some and getting ready to tackle the 2025 bond that will need to be addressed also.
                    Who knows, NuStar doesnt care what I think, nor should they!

                    1. Very helpful & great comments on the recent Nustar items.
                      Long time holder of NS-A …. NSS.

  14. Anyone know dividend pay date on Jackson financial preferred A shares.
    What’s a good site thats free to obtain preferred dividend pay dates

    1. I bet you can find that info right here on III but I always default to quantumonline.com. Non-cumulative distributions of the Annual Fixed Dividend Rate will be paid quarterly on 3/30, 6/30, 9/30 & 12/30 to holders of record on 3/15, 6/15, 9/15 & 12/15 or another date fixed by the board, not more than 60 days or less than 10 days prior to the payment date (NOTE: the ex-dividend date is one business day prior to the record date)

      1. Thx Gary,
        I am a Fidelity customer and since that did a site upgrade the pay dates of many preferreds are not listed. To use E-Trade, as you do, I would have to open an account. You were the only person able to give me a specific pay date.
        I do business with Stifel also and their site is not helpful.

        1. Schwab’s newly “re-imagined” research pages generally not only don’t list preferred payment or ex-div dates, they usually say the preferred issue doesn’t pay a dividend.

          If you “work around” and get to the “classic” page. it usually shows the info.

          The old page wasn’t perfect, but at least it had most of what I needed. It certainly could have used some improvements, but not the garbage they are rolling out. Don’t understand why they are introducing something that is so much worse than the old version.

  15. CDs at Schwab today… all CDs listed are NON-CALLABLE for DURATION

    1yr CD ~ Schwab Bank, 5.5%, 15987UCC0, semi, 10/1/24
    2yr CD ~ Morgan Stanley, 5.25%, 61690DEC8, semi, 9/22/25
    3yr CD ~ American Express, 5.0%, 02589AF31,semi, 9/21/26
    4yr CD ~ Morgan Stanley, 4.8%, 61690DDV7, SEMI, 9/20/27

  16. This is not a very scientific thought.. but I have noticed two accounts I have the lending rebate I get on mostly preferred and BBs is going up sharply last month. This is the money I earn when the broker borrows out shares.

    Aug – $156
    July – $99
    June – $89

    The other account has a greater increase in lending rebate but does have some ETFs and individual stocks but not a lot compared to preferred or BBs.

    The last time this happened preferred and BBs took a tumble as we all know as rates went up. Do others see this happening in their accounts as well? The account has to be pretty consistent in what it contains to be ?interesting? I suppose. I tend to think of this as people borrowing the shares, selling them, and hoping they fall in value to buy back later.

    1. FC, I think you are right. People are borrowing your shares to sell short.

      an increase in short selling in an issue is often (but not always) a signal that the issue will drop.

  17. UP today…

    WTI ~ 91.00
    Brent ~ 94.49
    AAA gas ~ $3.86
    PPI ~ 0.7% m/m
    CPI ~ 3.7% from 3.2%
    30yr mortgage ~ 7.24%
    MMFs ~ VMRXX 5.29%, VMFXX 5.27%, SWVXX 5.24%
    DOGS of DOW dividends ~ WBA 8.57%, VZ 7.81%, MMM 5.89%, DOW 5.18%
    COVID ~ cases UP 8.7% w/w, deaths UP 4.5% w/w

    DOWN today…

    10yr ~ 4.28%
    TLT ~ $93.53
    US car production ~ UAW strike is ON
    Cyber attack crippled Las Vegas casinos

    1. Hi guys

      Quick one. Are there any solvencies, financial ratios you take care of before buying either Babys or Preferred stocks?

      I`d appreciate your feedback

  18. Need a bit of a memory assist- I made a note that COMSP has no set call date even tho QOL shows 4/29/24 Why did I do that?
    (And yes it has suspended the cumulative div almost 16 mo ago)

    1. Gary – the prospectus is probably also wondering why you made that note because he says “We may not redeem the Series A Preferred Stock prior to April 29, 2024, except pursuant to the special optional redemption provision described below. On and after April 29, 2024, the Series A Preferred Stock will be redeemable at our option, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not authorized or declared) up to, but excluding, the date of redemption. Any partial redemption will be on a pro rata basis.”

      1. 2wr
        Thanks – sometimes I have to wonder…. funny- altho I made another one that included the notation : ( .325>PA) but for sure not ‘PAR’
        Guess I need to make longer notes!

  19. Does anyone know how AQN will transition from LIBOR to SOFR? I emailed the company and did not receive a response.

  20. Has anyone calculated the final value for WFC-Q and GS-J? the both go away this week, IIRC…

    1. My time value calculation for GS-J is 25.38 but the market does not seem to agree with me.

      1. Sun – I think the coupon from 8/10 to 9/13 was 9.266% . Payments accrue from the last payment date (not x-div date) to the date prior to the call, complicated a tiny bit by trying to figure out where the 5 days in a real 365 day year go in the convention used of 360 day or 12 months of 30 days each. So on GS-J it would be approx .00643 per day for probably 35 days for a total of 25.225. Guess we’ll find out tomorrow just how accurate this turns out to be but the market price today pretty much seems to agree with this.. If I’ve got the coupon right, then it might be only 34 days, not 35 (25.2186).

        BTW, is this pedantic enough for you? lol

        1. that isn’t pedantic, that is accurate !!! As a holder of the preferred, I appreciate the accuracy.

        2. I just got paid for GS-J @ TDA… ends up being .22524/share…. close enough for jazz……..

          1. As is typical of schwab, my GS-J is just gone from my accounts. No message, nothing in the history – just gone. I didn’t even notice they had taken it until I saw your post.

            Hope that means the money is coming soon.
            Schwab seems to be developing a habit of holding on to payments until after close of business. I guess it lets them collect a day’s interest on it.

            1. Private 2WR, any suggestions on what we can replace it with? Not necessarily another banking issue although I would consider the right bank.

              1. IMHO, the most obvious possibility right now would be STT-D. STT has already announced that STT-D will become fixed at 9.008% starting on 3/15/24. It’s 5.90% until then. Based on its current price of 24.98, it’s nothing special if you assume a call on 3/15, but then again it’s Baa1/BBB so probably fair. You get fair value if it’s called and 9% for Baa1/BBB for awhile if it’s not called immediately. TBTF bank.

            2. Until tomorrow when they hold WFC-Q until after the close (if they do). Then it is 3 days interest.

              1. Please do let us know if that’s what happens…… I’m still with TDA with no timetable as to when they’ll get move me but if this is consistent treatment by Schwab, then the short leash they’ll be on with me upon moving will get a couple of links shorter. I’m expecting to be able to see what TDA does on WFC-Q sometime after midnight tonight… That seems SOP but they were a little late on GS-J not posting that one until mid-morning…

            3. . Got the GS-J payment from Schwab after market close. Guess they got their day’s interest on it.

              1. Schwab did the same thing for WFC-Q. Money showed up promptly after the market closed. That way, I guess they can earn on it over the weekend.

                Crazy thing about WFC-Q. i didn’t have a whole lot of shares to redeem because I sold way most of my shares @$25 after the ex-div date. Why on earth were people willing to buy at $25 for the shares knowing they would get the same $25 a week or two later? Is there some strategy there I don’t understand or was it just stupid buyers who were expecting a stub divi or ??

                1. Thanks for the info, P….. CNBC was trying to explain SCHW’s continuing decline today and blamed it on TDA deserters…… You just reinforced the deserter’s reasons imho…. And as far as being paid $25 on WFC-Q after x-div date. maybe you can get in touch with the guys who paid me up to 25.05 yesterday for AAM-A and B….. Maybe they can explain it to us both…. lol

        3. 2whiteroses – thank you for the explanation; my calculation was from the x-div date, not the payment date.

  21. GJH – Here’s another wide spread observation sort of similar to BWNB v BWSN:

    Last trade on GJH Synthetic Fixed-Income Sec STRATS 2004-06, 6.375% US Cellular Corp. due 12/15/33 is $8.15 (it’s $10 par). It pays semi-annually on 6/15 and 12/15 and its security is the US Cellular 6.70% note due 12/15/33, CUSIP 911684AD0. S&P rates GJH and the underlying note equally at BB and consider US Cellular to be a “developing” situation most likely on the plus side….. At 8.15, YTM on GJH = 10.009% after subtracting the accrued of 16 cents approx. The underlying note’s YTM is 7.08% bid, 7.005% asked. So there is a 300 basis point spread between the two equivalent issues. Although a spread between the two seems to always exist, I think this one is presently seems too wide.

    1. Bwnb is ex tomorrow ; bwsn has less accrued interest built in ex is ex around 10/13 ; do a stripped yield calculation and i dont think there is much difference in yld

      1. What kind of yield are you calculating? BWNB @ 20.94 = 13.16% YTM taking into account the accrued.. BWSN @ 24.10 = 10.27% YTM taking into account accrued also..

    2. At 8.15, I get a YTM of 9.47% for GJH using the YIELD function, or 9.70% using XIRR, which recognizes the semi-annual compounding. Still not bad.

      1. Ahhhhhhhhhh nuts! Caught me again, nhc…. Glad you’re around when I screw up…… Somehow or other I ended up with 2031 in my bond calculator instead of 2033…. I have no clue how that happened as I obviously knew what the maturity was supposed to be….. Glad you got it right. and corrected my mistake… 9.706% is what https://quantwolf.com/calculators/bondyieldcalc.html comes up with also for YTM.

        1. Still, the value of your comments can be measured in dollars. The value of mine is measured in pennies. Apropos of your above post, if you want to match me in pedantry, you have some work to do.

  22. I show today as being the the dividend determination day for the following live floaters, and the new coupons with a SOFR3 of 5.4094%:
    CUBI-E 10.81%
    CUBI-F 10.43%
    GLOP-B 11.51%
    MET-A 6.67%
    MS-A 6.37%
    NS-A 12.44%
    NS-B 11.32%
    NS-C 12.55%
    ZIONO 9.91%
    ZIONP 6.19%

    Further, ZIONL will have a coupon of 9.56%, assuming it starts floating on 9/15.

  23. MLP’s : I own common in a few and am working through the taxes. Some of the K1’s show income earned in various states other than my home state of Texas. Do I really need to file non resident returns for any states in which my share of the income exceeds the minimum? Any advice or experience?

    1. Look at the total MLP income for each state and see if you still have a problem. I’ve owned several MLPs for over a decade and never had to file a state tax return.
      caveat: I am not a tax expert.

    2. The way I look at it, unless of course you own millions of dollars worth of MLPs, is that a state can come and request the money I owe if they feel it is worth it. I will pay them and the penalty. Naturally I doubt they will try to chase down a dollar here or there. Not worth it.

      I think the problem is when you own a lot.. that the number becomes larger.. that they may take an interest in you.

      I have never filed an out of state return for my MLPs. I would pay a lot more to file it versus what I owe for example.

      Not tax advice. I am not an accountant. I just live a bit dangerously in this case I suppose.

  24. ZIONL is set to go to float 9/15. Based on present SOFR3 + .0026, coupon will be 9.5%+. I have not seen anything from ZION confirming that ZIONL will actually go to float. Has anyone seen anything?

    1. While this doesn’t directly answer your question, the following is on page 30 of the Zion’s Bancorp 10-Q dated 6/30/23:

      LIBOR Transition
      London Interbank Offered Rate (“LIBOR”) has been phased out globally, and banks were required to migrate to
      alternative reference rates by June 30, 2023. We implemented processes, procedures, and systems to mitigate
      contract risk. New originations, and any modifications or renewals of LIBOR-based contracts, contained fallback
      language to facilitate transition to an alternative reference rate. Additionally, under the Adjustable Interest Rate
      (LIBOR) Act of 2022, the Federal Reserve Board (“FRB”) identified benchmark replacement rates for LIBOR
      contracts lacking fallback provisions with a clearly defined or practical replacement benchmark rate. At June 30,
      2023, we have remediated substantially all our LIBOR exposure through fallback language, replacement indices, or
      reliance upon the provisions under the LIBOR Act.


      1. The language about LIBOR on page S-29 of the ZIONO prospectus appears to be identical to the language on page S-28 of the ZIONL prospectus, and ZIONO is floating.
        This is what the Zion’s webpage says about ZIONO:
        Description: Preferred shares, Series G. Depositary shares = 1/40 of each preferred share. The annual dividend after June 30, 2023 is calculated as: SOFR + 0.26161% + 4.24 %, paid quarterly when, as, and if declared by Zions’ board of directors. See prospectus for complete details.

      2. On p 11 they reference only a supplement specific to ZIONL, but just try finding that gem! Looks like wait & see.

      Zions Bancorp jumped 7.5% after the U.S. regional lender posted a slight increase in its monthly net interest income growth.
      (now 6.85%)

    3. Officially isn’t tomorrow the actual day when the floating rate on ZION sub-notes and preferreds will be set? CUBI-E and F also and I’m sure others as well…. “The interest rate for each interest rate period in the Floating Rate Period will be determined by the calculation agent using three-month LIBOR as in effect on the second London business day prior to the beginning of the interest rate period, which date is the “interest rate determination date” for the interest rate period.”

      1. Thanks for the feedback, guys. RS is correct that the ZIONO prospectus language is substantially the same as the ZIONL language. And there is nothing in there about “or if there was no such dividend period.” ZIONO was already floating at 6/30 when LIBOR ceased. Is this a significant distinction from ZIONL? It shouldn’t be, but I don’t know for sure.
        2WR, yes tomorrow should be the day for those and some others too

  25. Interesting video of a Senate oversight committee asking SEC’s Gensler a lot of question he has not responded to. One hot one- looking into changing some rules in the mutual fund redemptions ( RE: covid run on them) and something about taxing retirement funds (?).
    I did a quick skip thru, but found nothing about the stocks they gave away to their buddies thru the gray marketing of so many issues.
    They have 60 rulings to finalize — worrisome.

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