Preferred Stock Investing-The Good , The Bad and The In Between 2021

[Free To Canoe]

Ran into a little UBTI trouble with my Enterprise Products partnership (EPD) in my Roth. It seem my selling it in 2023 triggered some 751 type gains in the K1. Just found out this week when Fido sent me 990-T that they filed.

No regrets here but maybe I could have avoided it by selling a little each year.

 

[Texas Proud]

OK... I have some C-N and it is up to $29+ a share... I have a few other over the call price but all less than a dollar...

It is paying over 10% so I do like it but do not want to lose 16% if it is called...

I was reading the prospectus but was getting into the weeds on it... I am not sure why it has not been called and did not look long enough to find out why...

Any thought on this? It is not a big holding so the loss is not that big of deal and I do not have anything else that I want to add to my holdings that pays this high of rate...

 

[bobandsherry]

Is the end near for ALL-B? You decide....

Allstate issuing $500 million in a new 5-year Senior Notes @ 5.05% (will not be listed on any exchange). The existing ALL-B issue is $500 million, paying 8.75% currently but was 5.10% when fixed. Coincidence? Use of proceeds on new issue is vague, "for general corporate purposes".

May seem strange to take out a long term with short term issue, but if one believes rates are moving lower in the future, this would seem to be a measure to stop the bleeding with the ALL-B with its floating rate now around 8.75%. This puts the rate slightly lower than they were paying originally, 5.05% for the new note and 5.1% was the original fixed rate of ALL-B. If true, this is a short-term solution to a longer-term problem, taking action until they can secure a more favorable long-term financing option.

Document

 

[tizod]

I follow HROW, and HROWM. While HROWM is over par by $1.60, it still might interest some folks. But the common has shot up, and they might float some to buy out this note, so maturity is up for grabs. I am now playing the "optimization" game to guess the best moves. Harrow Health, Inc. 11.875% Senior Notes due 2027, issued in $25 denominations, redeemable at the issuer's option, after 12/31/2024 but prior to 12/31/2025 at $25.50 (102%) plus accrued and unpaid interest, after 12/31/2025 but prior to 12/31/2026 at $25.25 (101%) plus accrued and unpaid interest, after 12/31/2026 at $25.00 (100%) plus accrued and unpaid interest and maturing 12/31/2027 (from QuantumOnline)

 

[Winemaker]

Is the end near for ALL-B? You decide....

Allstate issuing $500 million in a new 5-year Senior Notes @ 5.05% (will not be listed on any exchange). The existing ALL-B issue is $500 million, paying 8.75% currently but was 5.10% when fixed. Coincidence? Use of proceeds on new issue is vague, "for general corporate purposes".

May seem strange to take out a long term with short term issue, but if one believes rates are moving lower in the future, this would seem to be a measure to stop the bleeding with the ALL-B with its floating rate now around 8.75%. This puts the rate slightly lower than they were paying originally, 5.05% for the new note and 5.1% was the original fixed rate of ALL-B. If true, this is a short-term solution to a longer-term problem, taking action until they can secure a more favorable long-term financing option.

Document

Allstate just announced a $1.4 billion loss for May catastrophic losses, after a $494 million catastrophic losses in April.

 

[pb4uski]

Is the end near for ALL-B? You decide....

I've been surprised that it hasn't yet been called, so it would not be a surprise to me, but I'll ride it out and hope for the best. My largest preferred holding.

 

[bobandsherry]

I've been surprised that it hasn't yet been called, so it would not be a surprise to me, but I'll ride it out and hope for the best. My largest preferred holding.

Not a lot of risk on that, but plenty of reward if not called.

 

[Mulligan]

OK... I have some C-N and it is up to $29+ a share... I have a few other over the call price but all less than a dollar...

It is paying over 10% so I do like it but do not want to lose 16% if it is called...

I was reading the prospectus but was getting into the weeds on it... I am not sure why it has not been called and did not look long enough to find out why...

Any thought on this? It is not a big holding so the loss is not that big of deal and I do not have anything else that I want to add to my holdings that pays this high of rate...

Hey Texas. Here largely is the reason lifted from a Barrons article last year….
Despite having to pay such a high yield, Citigroup has opted not to redeem the preferred since it could do so in 2015. That has encouraged investors to believe that the bank will leave the preferred outstanding, perhaps until its maturity in 2040. Why?
The company has said in the past that it would be uneconomic. Due to a quirk in accounting rules, the securities are carried on Citigroup’s balance sheet for about $1.5 billion, not their face value of about $2.2 billion. A redemption would cost $2.2 billion at the face value of $25. This would result in an accounting loss of more than $700 million.
“If we were to redeem this, we would take a large hit to our P&L. And that’s just the way that the bookkeeping has worked on that security,” said Citigroup chief financial officer John Gerspach in 2017 on a conference call. “The decision to redeem that security is largely an economic one. Is it worth taking a large loss to redeem?”
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In a statement to Barron’s, Citigroup said: “As we’ve stated in the past, due to this grandfathered security’s carrying value on the balance sheet, it’s more attractive economically to leave it outstanding rather than to call it at this time. We continue to assess this on an ongoing basis.”

 

[Texas Proud]

Thanks Mulligan... I will continue to hold it then and just hope that it is still not worth redeeming... when interest rates go down it will cost them less so there is that..

 

[Mulligan]

If you like 10% plus and BB+ rated. I got one. It was issued a 5.625% par baby bond and has dropped and stayed in $14 range despite having the exact same credit rating when issued. But there is always a catch…Wanna guess? I own a couple thousand shares myself.

 

[Texas Proud]

If you like 10% plus and BB+ rated. I got one. It was issued a 5.625% par baby bond and has dropped and stayed in $14 range despite having the exact same credit rating when issued. But there is always a catch…Wanna guess? I own a couple thousand shares myself.

Sure, give it to me!!!!

Unless YOU own them all LOL...

 

[Mulligan]

Its the old SJIJ baby bond. It is delisted and trades on the bind desk by cusip number you have to call in to fixed income desk.
Same credit rating as it was issued as new parent is a responsible parent of utilities. SJI (South Jersey) is the holding company still while IIF who acquire it, is just the equity owner/contributer. SJI owns 2 regulated gas utilities and has some non regulated energy too.

https://www.fitchratings.com/research/corporate-finance/fitch-affirms-south-jersey-industries-inc-subsidiaries-ratings-outlook-stable-20-06-2024#:~:text=Fitch%20Ratings%20%2D%20Toronto%20%2D%2020%20Jun,for%20all%20entities%20is%20Stable.

QuantumOnline

QuantumOnline.com offers complete income investment security information for individual investors seeking regular returns on investments.

www.quantumonline.com

Here is trading volume and cusip number if interested.

Bond Page

Bond Page

www.finra.org

 

[Texas Proud]

Thanks for the info... I might look into this... as long as it trades during the day...

I still have a small (138 shares) of AFFS that I tried to sell but it said there is an end of day something or other on the security... so I did not look into it much as that is so small I do not want to waste my time trying to figure out how to sell it... just hang on and get the divis... 11% plus yield..

OH wow.. just clicked and see that it trades a large volume.... FINRA does not even show AFFS...

 

[Mulligan]

Thanks for the info... I might look into this... as long as it trades during the day...

I still have a small (138 shares) of AFFS that I tried to sell but it said there is an end of day something or other on the security... so I did not look into it much as that is so small I do not want to waste my time trying to figure out how to sell it... just hang on and get the divis... 11% plus yield..

OH wow.. just clicked and see that it trades a large volume.... FINRA does not even show AFFS...

AFFS trades on OTC market, where allowed by brokerages because it is considered an expert market issue. The old SJIJ trades on the actual bond desk with $1000 institutional bonds. FINRA would never show AFFS because it doesnt trade in the bond market.

 

[Texas Proud]

Thanks for that info.

ETA.... so, I just looked in Vanguard and they have nothing listed at all for this security... Schwab does and it looks like I can buy it at Schwab....

Trying to decide what to get rid of... or do I want to invest some of my spending cash I have sitting for the next year... decisions, decisions.... LOL..

I might sell as I recently connected my Vanguard with the Schwab account so I could see everything combined... and noticed I have a LOT of Primecap fund.. I think I might trim a bit of that off and buy...

 

[Texas Proud]

Well,, I did a test run and I cannot buy at Schwab without giving them a call...

Just tried at Fidelity and they do not even show the symbol just like Vanguard... at least Schwab does show it in their research even though nothing there except the symbol...

 

[tutan]

Just prior to SJIJ getting delisted sometime in March or April 2022 IIRC, I sold off most except 200 shares just to see how I get rid of them eventually. I have them at Merrill.

 

[Mulligan]

Well,, I did a test run and I cannot buy at Schwab without giving them a call...

Just tried at Fidelity and they do not even show the symbol just like Vanguard... at least Schwab does show it in their research even though nothing there except the symbol...

Texas, these cannot be bought online. You have to call the fixed income desk and get an “income specialist”. Here they will seek out bids and ask pricing from 3rd party desks. Then typically they get back to you in 30 min. or so. If the ask is within reason I take it, because I dont want to go through the gauntlet again.
I actually have bought a fair amount of it and the other Nassau Companies of New York. And then an amazing dump occurred yesterday in rare as hens teeth MSEXP, and I bought 659 shares of it at $103.50 average. So between those three combined I am violating some maximum individual percentages limits.