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Watching More Paint Dry Today

Things are quiet–really quiet. The S&P500 is moving in about a 3/4% range, but at this moment is up just .07%—there is no doubt about it that the debt ceiling is holding the market hostage to any major moves. I’m just going to wait to see what happens there prior to further commitments to preferreds or baby bonds.

CD rates remain high–as much as 5.30% on a 1 year–and I might go ahead and add another purchase there – 1 year at 5.25 or 5.3% is darned good – there are NOT call protected but a 9 month or 1 year commitment may well go all the way to maturity.

Here is what FIDO has right now available.

I see that PacWest has sold off a bunch of there real estate loans–of course at as discount, but the discount isn’t as high as one might expect–the portfolio is a $2.7 billion portfolio which they sold for $2.4 billion. Info is here. The regional banks continue to de-risk.

I was just looking at the lodging preferreds and while it should be obvious to everyone why at this point in time would anyone buy any of the Sotherly (SOHO) issues? Current yield on their issues are about the same as Pebblebrook (PEB) and other other higher quality issues–it makes no sense–should be trading in the 10% current yield area. The lodging preferreds are here. Regardless I am not adding further to lodging issues until we can see the debt ceiling resolved and then I will step back and re-evaluate given the potential recession ahead.

The 10 year treasury is right at 3.70%—treading water just like equities. So I guess I’ll just watch and wait.

11 thoughts on “Watching More Paint Dry Today”

  1. gonna watch “the paint dry” on 40m 1year treasuries Purchased yesterday best deal in town at over “5%”

  2. Tim–as one of the SOHO preferred guys I have them penciled in at a roughly 12% coupon at par, based on them catching up on some of the deferred dividends this year.

    That’s not a sure thing, of course, but the cash flows can support it right now and management has outright said on the last earnings call that paying off the preferred arrears is one of the strategic goals of the company.

  3. You would buy the SOHO preferreds if you believe that they will pay the deferred dividends someday.

    1. David–yes I know they have a partial deferred dividend but it wouldn’t be enough for me to buy them – their financials are pretty tenuous.

  4. Picked up more : 3 Mo: Zions BanCorp, Ntnl UT 5.2%, APR 5.302% CD 08/31/2023
    “No cash call identified”
    Merchants Bank has the same

      1. Well what if the Treasury market locks up??

        Besides zions pfds have gained over 10% in a week.

        1. I picked up 300 shares of ZIONL at Schwarb following Tim and Charles M who seems to be keenly aware of risk vs. reward. It is a sort of baby bond, perhaps a little safer than preferreds. I sold off some of the earlier positions such as WCC-A (still reasonably safe IMHO but bought too much or chasing after too many). Took some tax loss but kept 300 shares. These days, it is possible that ZIONL could be riskier than WCC-A, electrical parts would always be needed perhaps. Very little to get the symbol from Schwab. Just watching the position and check ZION for its market action. No clue on symbol in FIDO (needs to call their Fix Income group, I suppose).

      2. I tried looking at purchasing- but selling if needed, looks like I’d be in a bid/ask risky situation. Maybe I’m wrong- am I?
        Or is selling early not even possible?
        They are FDIC insured.

  5. Bought couple more AAA Farm Bank Agency Bonds – 3133EPHW8 – 1 year Non-Call 5.84% , 3133EPJT3 – 2 year Non-Call 5.3%

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