Eoneren
Eoneren
CDX3Investor.com
Synchrony Financial (SYF) priced an offering of $500 million worth of new 8.25% fixed rate reset non-cumulative series B preferred stock, with the initial 8.25% dividend rate to be paid until May of 2029 at which point the preferred becomes callable, and if not called, the rate resets to the then-current 5-year US Treasury rate plus a spread of 4.044%. The new shares received credit ratings of BB- and B+ from S&P and Fitch, respectively. The new shares are trading temporarily on the OTC under symbol SYFPL, before eventually moving to permanent symbol SYF-B on the New York Stock Exchange.
Atlanticus Holdings Corporation (ATLC) priced an offering of $50 million of new 9.25% senior notes due 2029. The new notes are designed to be redeemable at any time after issuance, at the company’s option. The new notes were rated A by Egan-Jones Ratings Company and trade on the New York Stock Exchange under symbol ATLCZ.
Specialty finance company Redwood Trust (RWT) priced an offering of $60 million of new 9.125% senior notes due 2029. The company may redeem the notes early beginning in March of 2026. The company indicated that a portion of proceeds may go towards repaying or repurchasing previously issued debt, as well as funding new investment activity in the company’s mortgage banking businesses. The new notes were rated BBB by Egan-Jones Ratings Company and trade on the New York Stock Exchange under symbol RWTN.
And AG Mortgage Investment Trust (MITT) priced an offering of $30 million of new 9.5% senior notes due 2029. The company may redeem the notes early beginning February 15, 2026. The company indicated that a portion of proceeds may be used towards repurchase or repayment of its convertible notes due this year, as well as to invest in new residential mortgage backed securities. The new notes were rated BBB- by Egan-Jones Ratings Company and trade on the New York Stock Exchange under symbol MITN.
SEC filings for further information: ATLCZ, RWTN, MITN, SYF-B.
Preferred stock IPOs often involve a temporary period during which OTC trading symbols are assigned until these securities move to their retail exchange, at which time they will receive their permanent symbols. For example, the new Synchrony Financial preferred discussed above, which is initially trading under symbol SYFPL on the OTC:
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Individual investors, armed with a web browser and an online trading account, can often purchase newly introduced preferred stock shares at wholesale prices just like the big guys (see "Preferred Stock Buyers Change Tactics For Double-Digit Returns" for an explanation of how the OTC can be used to purchase shares for discounted prices).
Those who have been following this strategy of using the wholesale OTC exchange to buy newly introduced shares for less than $25 are more able to avoid a capital loss if prices drop (if they choose to sell). Note that in the cast of the new Synchrony Financial preferred, on 2/16/2024 shares were changing hands around $24.92; as of this writing SYFPL is trading at $25.12.
Your broker will automatically update the trading symbols of any shares you purchase on the OTC, once they move to their permanent symbols. A special note regarding preferred stock trading symbols: Annoyingly, unlike common stock trading symbols, the format used by exchanges, brokers and other online quoting services for preferred stock symbols is not standardized.
For example, a given Series A preferred stock might have a symbol ending in “-A” at TDAmeritrade, Google Finance and several others, but this same security may end in “PR.A” at E*Trade and “.PA” at Seeking Alpha. For a cross-reference table of how preferred stock symbols are denoted by sixteen popular brokers and other online quoting services, see “Preferred Stock Trading Symbol Cross-Reference Table.”
In addition to covering new preferred stock and ETD offerings, we also track past offerings, with alerts when securities fall below their par values. For all of 2023, the basket of CDx3-compliant preferred stocks and ETDs (i.e. scoring 10 out of 10 on our compliance scale), traded below par value of $25 as a group, with our internal “bargain table” count elevated compared to the past ten year average – that count representing our tally of the number of high quality preferred stocks and ETDs available below their par values.
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We track when different securities become available below par, and to close this article, we would like to share with you some of the most recent dips/crosses below par we have observed among individual securities (note that yellow highlighted entries indicate highly rated securities eligible for the “CDx3 Bargain Table”):
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For those preferred stock (and ETD) investors interested not just in new IPOs but previously issued securities, following par crosses can provide useful insight into which securities have recently become available in the marketplace below their initial offering prices; for example NEE-N is a 10 out of 10 CDx3-compliant security (highlighted in yellow), which crossed below par value on 2/28.
In our monthly Seeking Alpha articles, we typically summarize all the new preferred stock and exchange traded debt offerings observed over the course of the month; we also highlight past offerings that have begun to trade below par value. Our goal is to keep fixed-income investors up-to-date on the various investments available in the current marketplace, and we hope this month’s article has served this purpose. See you next time, and thanks for reading!