3 New Issues Have Started Trading
By: Tim McPartland,
3 new issues have started to trade in the last number of days. 1 issue is a non cumulative preferred issue, with the other 2 being “baby bonds”.
Medallion Financial Corp. (NASDAQ:TAXI), which is a specialty finance company, sold a small issue of $25/share baby bonds. The coupon on these bonds is a sky high 9%. As with most income securities the risky issues have to pay high rewards to buyers and there is more than enough risk with this issue. Medallion Financial Corp owns Medallion Bank which has a “book” of loans of over $600 million of which 50% are to the taxi industry. While the company has performed well thus far the future looks murky as companies such as Uber are likely to make life difficult for the taxi companies. The best thing that can be said about this issue is that it has a relatively short maturity in 2021.
This issue is trading now under the ticker TAXIL and the shares are trading between $25 and $25.25/share.
Newtek Business Services (NASDAQ:NEWT), a business development company (BDC), has sold a short duration baby bond. This $25/share issue has a maturity date in 2021 and carries a coupon of 7%..
The new issue is trading under the ticker NEWTL and in the last 4 days has traded in a range of $24.65 to $25/share. The company has another baby bond issue outstanding with a coupon of 7.5% which is trading at $25.50 which would lead us to believe that the new issue has little capital upside.
Customers Bancorp Inc. (NYSE:CUBI) has sold a fixed-to-floating rate preferred stock. Carrying a coupon of 6.45% (until 2021 when it will begin the floating rate) this issue has started trading on the OTC Grey Market under the ticker CUBBP and has traded in a range of $24.90 to $25.20/share. CUBI has 2 additional preferred issues outstanding and both are fixed-to-floating issues. These 2 issues would lead us to believe that the new issue will have little capital upside from here forward. You can compare the issues on our “swaps” page to see if you might have an interest in CUBI preferred shares and which might best fit your needs.
Being bank shares these shares are non-cumulative in regards to dividends (if not paid they are gone forever), although the dividend payments will be “qualified” for income tax purposes.