Well if we can all kick off the cobwebs of a long week-end it is time to get ready for the next 4 days, which will fly by quickly. We will see if interest rates stabilize in the 2.30% area and if the SP500 can get its footing right in the 2826 area or if it will continue to move lower.
Last week the 10 year treasury moved as low as 2.29% and was as high as 2.44% before closing out the week on the lower end at 2.32%. The SP500 traded in a range of 2805 to a high of 2868 before closing the week at 2826 down around 1% on the week.
The Fed balance sheet fell by a strong $14 billion last week to be at $3.86 trillion. Last week the balance sheet had fallen by $28 billion.
The average $25/share preferred stock and baby bond ended the week at $24.85 which is a move higher of 2 cents last week–this gives us a change in the last 3 weeks of 2 cents–as we had mentioned before the average issue is pretty quiet. The days of easy quick flips and dividend captures are behind us for now–but they will return at some point in the future.
We note that Public Storage called for redemption the PSA-Z 6% issue last week. The next PSA issue–which they WILL call (based on current interest rates) will be the PSA-A 5.875% issue which becomes redeemable on 12/2/2019. You can see this one here–and if I owned it I would sell it now–it is trading now at $25.69–in the next 6 months if it is called it has just 1% of upside (total return) to the end of the year. If desired the company can issue at 5.50% right now.
Eagle Point Credit (NASDAQ:ECC) also announced early redemption of 1/2 of the ECCA 7.75% term preferred issue. The share price fell from the $25.60 area to $25.35 or so. With a potential full call always possible we should see this issue stay in the $25.30 area for the foreseeable future.
Last week we had Ladenburg Thalmann (NASDAQ:LTS) announce a new baby bond with a coupon of 7.75%. Of course the company has 3 other baby bonds outstanding and 1 monthly paying preferred outstanding–you can see the current issues outstanding here. The new issue ticker is LTSH although at this time it is trading only on the bond desk at $24.84.
TriState Capital (NASDAQ:TSC) announced a decent new preferred issue with a coupon of 6.375%. The issue raced to $26/share, before setting back to close the week at $25.52. It is trading under OTC Temp Ticker TRSXL.
Lastly we believe that the newer Algonquin Power and Utilities 6.20% baby bond will begin trading on the NYSE tomorrow as their NYSE registration was just approved a couple of days ago. It has been trading only on the “bond desk” up until now and last priced at $25.32. I believe it will trade under AQNB, although the new ticker wasn’t officially announced.