As mentioned by a number of people today Wells Fargo has issued their information as to the transition from LIBOR (which is going away in June).
Like many issuers WFC has a number of outstanding fixed-to-floating rate preferreds so a clarification was needed as to what they would transition to when LIBOR (they were issued with 3 month LIBOR floating rates) goes away on 6/30/2023.
Here is Wells Fargo’s press release.
WFC WILL NOT use SOFR, but will use the the original fixed rate, plus the designated ‘spread’ from the prospectus. This method will result in sky high coupons, so one should expect these issues will be redeemed when 1st redeemable.
I just did a larger post on SOFR and the review period that led up to it. Perhaps I was too blunt and it was not posted.
Read up on SOFR and the details around it’s private input period. Do your own research and you will see how crooked our system is cowtowing to these bankers. WFC needs a public whipping. Where are OUR institutions. Yes, The Common Man. Hank Paulson did it with one page…remember. He knew who he was talking to. Screw these dudes. They will eat your children and smile, they will not comply, they are above compliance.
Comply or pay on-going non-compliance fines OR call and announce by a deadline. Everyone else, common men and businesses, serve the calendar, credit limits, added interest, compounding, and mandates from law and contract, regulation and deadline compliance.
I am losing all faith and creditability in our system. I’ve been edging out since Jan and am going ‘dark’ myself. Don’t believe the charlatans for a minute.
Kind of an is what it is thing to me. I have several LIBOR floaters myself. I actually wouldnt care if they were converted to 3MT SOFR already. Being I would have 2.5 bps more yield with it than I do with the present Libor yield.
That’s the hope. But they may revert to original coupon. Or they may pull a surprise out of their Hats and go back to another rate saying they are being forced to. IMO they should convert to sofr or forever more be viewed as unfair charlatans not worthy of investor trust. And seeing these organizations pride themselves as fiduciaries of the first order it bothers me to no end that some are not converting.
This is where knowing what your prospectus says is important. I only have 2, ALL-B and NSS. And its pretty clear what option they would have to use if they chose to not go with 3MT SOFR. And actually I would be thrilled if they followed the prospectus. But clearly long term it likely behooves them both to use the SOFR. Of course ALL can redeem at anytime if they desire, but NSS isnt going anywhere fast.
Joel A,
“They will eat your children and smile”
Brings to mind what the late George Carlin used to say ” It’s a big club and you ain’t in it”
Along those lines, I got an e-mail from Citibank that said “Congratulations ! We lowered your credit card interest.” I always pay the entire balance when I get he bill, really have no idea what the interest rate would have been, so for giggles I checked it. Even though I have an 835 credit score, my interest rate on that card was 19% ! They lowered it to 18.6%. I could not care less about ANY bank going bankrupt.
Bill, Dont let Citi go under, I would greatly miss my 2% cash back on every purchase. It has bought me all sorts house appliances over the years. You just have to play the game and use them not vice versa. Its like going to get gas. I use my 2% card, get my Caseys reward points, upload the receipt to Upstart and get 13 cents a gallon cash back, and then save all gas receipts for end of state fiscal year to get reimbursed by state for my gas tax payments. Its almost like getting my gas for free, lol.
Grid,
How are you able to get reimbursed for gas tax payments ? Here in California working people never get reimbursed, we are only told we don’t pay our “fair share”.
Bill, our state General Assembly lacked manhood to pass a tax increase and call it a tax increase. They wanted more state road revenue and jacked up the state gas tax, but also inside the law was a provision one can file a voucher form with gas receipts and get the tax rebated back to you. This way they can say they didnt really pass a tax increase since you can get the money back if you claim it. Obviously they are counting on people being lazy or stupid and not filing to get their own money back. And largely they are correct. So they got to have their cake and it too. Passing a “no tax increase” tax increase.
Grid,
That’s amazing, simply amazing. People just driving through your state also pay the tax and probably don’t have a clue one could do this. Alright, I’ll pull the pins out of the Citibank voodoo doll, besides it looks more like Jamie Dimon than it does Jane Fraser.
Bill, you got it! Dont tax you, dont tax me…Tax that fella behind the tree! Last year I blew it off, but it keeps rising (silently) an additional 2.5 cents annually for next several years. A friend said he got $100 back. He convinced me its not the money, but the principal of the matter. Passing a tax increase and then having the nerve to declare it really isnt one because you can get your money back.
Bill, I just checked last years data, (first year). An extra $78 million was taken in and less than $450,000 was claimed by refund process. So “the trick” is working as people are lazy. And this year it will double. State is projecting $1.8 billion in extra tax revenue over the first 5 years of the “ no tax increase”.
Not bad considering its not a tax, lol.
Assuming this is unrelated to the gas tax rebate. Can you provide a link where we can find more info? Many thanks!
Sorry Mitch. Yes that is pertaining to the MO only state gas tax increase.
Grid…couple of questions (1) Is that a typo on “Upstart”? I see a gas discount offered on “Upside” https://www.youtube.com/watch?v=FWJEcDPrARk, while Upstart appears to be loans. (2) I thought you mentioned once that you lived in Florida, which I do, but I can’t find a gas tax refund voucher mentioned with a Google search. Plenty about a DeSantis tax holiday, which lasted one month.
Oops, you are correct Lucky…Its an app called Upside. You get cash back from various participating grocery stores, gas, and restaurants. I use it for grocery as I typically get 8% back ($15 cash back max limit per visit though) from local grocery store I use for various stuff. And my closest gas station participates typically at 11 to 13 cents a gallon. No, I live in MO not FLA. Too hot and too many bugs in FLA. Oh wait, it gets hot and buggy here, too. So I must live here because housing is cheaper in flyover country!
https://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
Over time: explore, use your mind, experience new perspectives, study, allow, download for free via Nick Gomez, Alan Longbon, Robt Balan: Voices calling, teachers.
I own WFCpR, and I can’t get enthused about selling it.
The floating rate goes to 10.315% in March, 2024, which says to me WFC has no choice but to call it. Having bought it at 25.02, I can’t see selling it @ the current price of 25.26, when I can lose a whopping 2 cents at call and get four nice dividend payments.
It’s not like there’s a lot of great opportunities out there calling for my money.
What I was told is Q is going to go to….coupon PLUS 3.09. So almost 9%. Regardless….. I sold all today.
It’s interesting that MS didn’t address MS-A in the following press release:
https://www.businesswire.com/news/home/20230428005576/en/
Based on the following prospectus language, I’m curious if the dividend will be effectively “fixed”. I tried calling IR to get an answer and have not heard back yet.
“If the banks so selected by the calculation agent are not quoting as set forth above, LIBOR for that dividend determination date will be the same as LIBOR for the immediately preceding dividend period, or, if there was no dividend period, the dividend payable will be based on the initial dividend rate.”
https://www.sec.gov/Archives/edgar/data/895421/000095010306001639/dp02970_424b2.txt
Hi Dick
I have the MS E which is currently fixed and was going to float in October that one will remain fixed with a coupon of 7.125% which is what is stated in the link you posted and also what is in the prospectus.
I also have NLY G and F which are currently floating. Per the prospectus these will will essentially become fixed using the March 29th LIBOR print moving forward. This is totally fine with me, as I suspect SOFR will start to come down over time. It looks like MS-A will be treated the same way as it is currently floating.
I am happy with the yield I am getting on the MS E and personally happy that with the treatment of the NLY floating preferred. I suspect they will call the latter, however, given that there is no chance that rates will drop when the fed finally starts to ease.
It seems that the way these floating rate preferred are getting treated is perfect from the investor’s perspective. The coupon adjusted upwards while the Fed was raising rates, and then just as the Fed appears to be ending it’s hiking cycle they are adjusting to a high fixed rate (per their prospectus). What is nice is that the NLY is at a discount to par so they can call them all they want as far as I am concerned.
DW, While not specifically mentioned in the press release, MS-A with a 0.70% spread to 3m LIBOR will convert to the 3M SOFR and I doubt it will be called for quite some time. Although it does have a 4.00% floor, interest rates would have to get pretty low for MS to call it.
Same move as that other big bank. ALSO……. Supposedly key and state street have similar language.
Sold my larger WFC.PRQ position at about $25.06 this morning and if this security swings back under par by 0.10 or so, would consider buying it again. I am biased because I find Wells Fargo to be one of the most unethical banks in the US. They filed 4 seperate fraudulent credit cards in my parents names without their permission a couple years back. I got a call from the CEO’s office after I filed suit and CC’s the CEO, but the damage was done…
AB, when I was laid off in 2010 and no longer had payroll direct deposit, I was directed by one of the teller’s or br. officer to transfer from savings to the checking account the minimum required to keep the free checking then back again so it looked like I had the funds in the checking to keep it with no charges. I also ended up with two credit cards which I asked them to cancel as I only wanted the debit. Later in my town it was in the news that a br manager was sueing for being fired. She said corporate or regional was pushing to open new accounts even if it meant it was just a few dollars in the account.
I no longer do business with them or B of A
I always asked myself where did the managers go who worked at Country Wide when it was taken over. You keep a rotten apple in the barrel with the other apples and the rot spreads
So, a floater isn’t always a floater… hmm.
They are saying the Sep rate will be 5.85 + 3.09 = 8.94% which is Higher than if they were using today’s 5.2% 3 mo. I guess they are thinking the 3mo will keep climbing and not come down? Maybe no intention to call it?
Right Gary.
Ha. And just like that, WFC-Q goes back to par.
I was going to buy it next week. 🙁
Hello,
apart from MS-K STT-D and WFC are there any other pref. stocks that have announced or are preparing to announce how the LBR clause is going to work forward
STT-D seems to have similar prospectus language to the WFC floaters with regard to LIBOR. QOL has the following note about STT-D:
Per the 10Q filed April 27. 2023 — The dividend rate for the floating rate period of the Series G preferred stock that begins on March 15, 2026 and all subsequent floating rate periods will remain at the current fixed rate in accordance with the LIBOR Act and the contractual terms of the Series G preferred stock.