YIKES–Public Storage Prices New Preferred–Updated Ticker

The OTC ticker was changed to PSAGL

Public Storage (PSA) has priced their new preferred stock issue at the rock bottom low coupon of 4.125%. They will be selling 8 million shares with another 1.2 million available for over allotment.

With this coupon the redemption of the PSA-X is most likely to occur as it is exactly the same number of shares–PSA-W will live on.

It will be interesting to see how this coupon trades–I predict it will trade around $25.25 after a week.

You can review all preferred issues from PSA here.

The pricing term sheet can be seen here.

Jerry was on this extremely low coupon at 1:43 pm central time today.

23 thoughts on “YIKES–Public Storage Prices New Preferred–Updated Ticker”

  1. I just took a look at the price, and the last sale was $25.28. That makes the yield at 4.07%. That’s just too low for me, so I’m out on this one!

    1. What do you folks bet that this one will go to $26 within the next month or two? I’m thinking it’s highly likely.

  2. For those looking to beat 4.125%, you can get a 4.46% yield on noncallable SOCGP right now (ask price is currently $33.66). It’s BBB+ rated and QDI.

    1. I’m also surprised that SLMNP doesn’t trade higher…if this one traded for $1,100, it would yield 5.45%. The current ask is $1,026.

      1. You’re talking about things with no volume and a bid ask spread so wide you could drive a truck thru them. I’m not saying they aren’t good compelling values just something it’s not easy to trade.

        Chart shows days of no trades and av volume LOW!

  3. I’d rather take my chances with a $6 IG floating Canadian. Eventually rates may have an ameliorative effect on the price and collect just about an equal coupon while waiting.
    I want to be right long term. Seems the general market chases the end of the Pavlovian tongue.

    1. Talk about yield compression, this is amazing to me… Since this issue was priced so aggressively Treasuries have backed up what, about 15 basis points? And yet not only this issue but it seems like every other preferred hasn’t missed a beat as it’s already trading at a premium. It’s a one direction market it seems. In the back of my head, I keep hearing Warren over in a corner somewhere saying, “Be fearful when others are greedy. Be greedy when others are fearful.”

      1. One can overpay for safety. This could be a possible example. There are many issues with a few notch lower quality that have paid for years on end and will continue too with better yield. Everything is assumption based, but the issues most closely tethered to govt long end bond are the very low yielding highly credit rated issues. In 2013 these got smoked while the high yielding issues were largely unaffected during the “taper tantrum”…..But everything boils down to your assumptions and what your purpose in buying really is.

  4. While PSA has a fantastic credit rating, I never thought I would see a coupon rate this low. In fact, did not think it would get below 4.5%. With rates this low, it may end up pushing me over into more common stocks – which I certainly don’t like. However, considering inflation and income taxes, the rate is just way too low for me.

    1. KLou, THAT is EXACTLY the intent of ZIRP!
      I’ve been buying decent commons like PRU, CTL, BEN, XOM and selling options close in. If they get taken out or I get a dividend…okay. Righjt now that seems to be working and is a flippers paradise…for now. Gotta know they may have to be held long term also!
      GOOD LUCK!

  5. The capital loss from a small backup in rates of only 0.50% (50 bps) over the next 3 years, such as a small 50 bps rise in the benchmark 10 year Treasury rate, would offset most of the income. If so, in real terms, i.e. after inflation, it would essentially be a zero sum result. NOT a prediction that rates will creep up over the next 3 years. I have NO IDEA what long term rates will do. But as for myself with my little pea brain I do not have the knowledge or ability to forecast with any degree of certainty what long term interest rates will or will not do over the next 3 years. With so much new helicopter money being created eventually something might break.
    Series M a flip maybe but NOT as a long term hold for me.

  6. I am glad I bought the last issue. I almost didn’t because I thought the coupon was too low.

    Little did I know…

    1. I also had bought PSA-L when it first came out, but after seeing it rise to the high 25’s in such a short time, I made the decision to sell off 75% of my holdings – in hindsight, a bad, bad decision…..

      1. But only in hindsight
        What’s the present YTC on the PSA-L?
        Was the current price foreseeable or is it reasonable? I wouldn’t hold it at the current price and I don’t see the high 25s as being an unreasonable exit point. Nevertheless this probably doesn’t make you feel any better.

        1. My cost basis is close to par, so can afford to hold, since the First Call date is a few years ahead.

          Guess I was hoping to do a Gridbird flip and restock move, which did not pan out. LOL

          1. You can afford to hold, but is that the best option compared to other alternatives out there? Obviously a matter of personal preference. PSA is certainly a high quality credit, so I can see taking a somewhat lower yield, but I guess where one draws that line is why we have buyers and sellers.

      2. inspbudget:

        Well, hindsight is always 20/20, unfortunately. Me, I buy preferreds for dividend income, not for capital gains necessarily. They’re icing on the cake, but not cause to sell.

  7. Fire the underwriters who didn’t want to issue BIP preferred at 5.5% because it was too low.

  8. Thanks Tim. How soon would you expect these to be available at brokerage houses? They aren’t at Schwab yet. I was able to purchase the last offering, PSA-L, at par and would like to add these.

    1. Alan–they will trade today under OTC ticker PSAAL. Of course some of the brokers will lag and may not have it until later today–or some even tomorrow.

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