Sometimes you get ugly surprises–once in a while you get a capital gain bonus. For holders of the Priority Income Fund 6.25% term preferred (PRIF-G) the surprise came in the form of a redemption notice. The redemption notice is for 12/23/2024 at $25/shares plus accrued dividends from 9/30/2024. This issue became redeemable 3/19/2023 and had a mandatory redemption date of 6/30/2026. Shares were trading around $24.30 yesterday and closed at $25.04 today.
It is somewhat unusual for a term preferred of this relatively modest coupon to be called early in this interest rates environment–but the issue is only 1.28 million shares so the $32 million cost to redeem is minor to a $1 billion CEF.
Priority Income has an active ‘at the money’ common share sale program which can readily generate cash for redemptions such as this one.
The good part for holders is they got a 3% pop on their shares and they have plenty of other PRIF term preferreds to chose from to invest their proceeds.
Odd that the closing price of PRIF-G wasn’t higher, when there is ~36¢ that will accumulate – so room to rise. Fido shows the 11/21 close as 24.41
“to be called no earlier than 12/23” — possible they could go longer / wiggle room?
Weird . PRIF-D -7%.0 , PRIF-F 6.62% coupon callable same size issueS
Nikolas–looks like they are going by nearest mandatory date.
The interest expense for the G series is more than that of the D and F shares. That might have been a factor too.
NewToThis2015–yes you could be correct.
NewToThis – Please steer me right. I interpreted interest expense on D (.4375) and F (.4141) as being higher than redeemed G (.3906). I believe they were all trading 24+. Side note: new to this site and a late arrival to pfds/bb;
expect there’s something I’m missing. Thank you.
I am referring to the cost to PRIF for the entire series of preferred shares. The total interest cost for the G Series is more than the cost of the D and F Series.
This is a two part equation consisting of number of shares outstanding and the applicable interest rate.