Below is the details on the new preferred stock issued by the SCE Trust VIII.
The trust preferreds issued by the trusts of SCE are different than most trust preferred shares—these trusts preferreds pay dividends which are both cumulative and qualified. Unlike most trusts the SCE Trust VIII owns shares of preferred shares issued by Southern California Edison—typically the Trusts (of other companys) own debentures of the forming corporation and thus the dividends of the trust preferreds are treated as interest and not dividends.
The pricing term sheet can be found here.
SCEXP (temporary symbol) is now trading at Schwab
I was reading some research on EIX/SCE and they emphasize RISK in the common! In between floods, fires, law suits…… 1 report said basically no up side and 75% downside possible!!
Being a rate hog its really hard for me not to ‘slam’ their pfds issue on the long side.
I just saw a so cal Edison Corp floating at sofr +440 ot 9.87…. Why call an 850 instead of a 9.87?
Ive been told.. Don’t try to figure them out!!
IYP, which issue is at 9.87%? And with such high yield, it is likely to be called.
Cusip…
842400FU2
Its close to par, like a buck and a half. 100.5
Yes it could. Question is not only when.. But will it be full or partial. SCE has been high in yield and consistently below par in many issues for years. In between fires and floods they keep being targets of law suits. I remember a SF resident advisor telling me to be careful with the name!
Also I do 99% twenty five dollar preferreds and keep away from corporates for a host of internal business reasons. So I have no knowledge of the idiosyncratices of any corporate. Other then to say they have higher yields than 25’s.
It will be redeemed on June 6, 2024
https://newsroom.edison.com/releases/southern-california-edison-announces-redemption-of-sce-series-e-preference-stock
Temp ticker SCEXV.
Not in Fido’s system yet. From the 10:17:06 timestamp below, they only announced the symbol an hour ago.
https://otce.finra.org/otce/dailyList?viewType=Additions
05/08/2024 10:17:06
05/08/2024 00:00:00
SCEXV
SCE Trust VIII Trust Preference Shares Series N
I thought Trust Preferred are not considered Qualified Dividends.
It depends on what is inside the trust. The trust itself doesnt determine the tax status. The trust is just the “wrapper”. Typically its subordinate debt, but it doesnt have to be.
Thanks Gridbird for clarifying qualified tax status of new preferred SCE
Fido now shows the symbol as SECXP
So weird…what’s the point of the utility issuing these as a TRUPS rather than a direct preferred stock?
For banks it made sense back in the day because they were structuring the deals as debt for tax purposes and preferred stock for regulatory capital purposes.
Utilities already treat preferred stock more or less the same as debt for regulatory capital purposes, and they have workarounds anyway, like putting preferred stock or debt at the holding company level and hoping the regulator only looks at the capital structure of the operating subsidiary.
Lots of states require permission before utilities issue new debt or preferred securities, but this still results in a new preferred issuance so it would still require permission if California has a permission regime.
Is it that the utility is doing the preferred stock as a private placement and then the investment bank running the trust does all the SEC work for registration?
I’m just not getting it.
I bought a trust preferred stock from WFC several years ago and it kept going down in value each year. After several years, WFC called it, and its value jumped to $25. I was really happy, but instead of paying out $25 per share, it was much less. I don’t remember the exact amount …somewhere between 12 and 15 per share. I never bought a trust preferred again.
This one appears to pay at least 100% of liquidation value at redemption. Did you ever go back and look at the WFC issue’s prospectus out of curiosity?