Housekeeping – Reader Notes
By: Tim McPartland,
John pointed out that we had the Alabama Power listings messed up on the SWAPS page. He was correct–we believe we got these corrected and additionally checked and corrected any Alabama Power listings throughout the website. Thanks John
Jonathan commented that he wasn’t buying the new JPMorgan Chase preferred shares because they were perpetual. He speculated that the value was maybe in the $25.30 area (up from the initial $24.80 or 24.90 on the OTC). We agree. We have no interest because of the perpetual nature of the shares and simply aren’t buying perpetuals at this time because of the potential rate rise that may occur. We also agree with your potential valuation number.
David asks about NSS. NSS is the Nustar Logistics exchange traded debt issue. It is a 7.625% fixed to floating rate note. We do have it listed on the exchange traded debt listings here. For us personally we are not owners of this issue–nor will we be in the future. The primary reason is that it doesn’t mature until 2043. Presently we are keeping shorter durations. If we bought this to hold to maturity we would be over 90 and currently we want to mainly lean toward those issues that we can see through to maturity. In general though we think this is a decent issue. It is going to hold the 7.625% until 2018 and then it will float to 3 month libor plus 6.734%. This is one of the few floating rate issues thatmay pay more after the float begins than before it begins. So many of the floaters are 3 month libor plus 3-4 %–the odds are they will reset rates lower than before the reset. For someone simply looking for an income stream with less sensitivity to capital movements this is a good one. Nustar Energy is a MLP that is quite a giant and they will do just fine in the future.
Thanks for these notes. We are trying to get through more of our readers correspondence, but we still can’t fully get through the volumes we receive.