Recapping Income Securities Last Week

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Get Caught Up on the Income Security News You Missed Last Week
 The Yield Hunter
Recapping the important news in income securities in the last week. New issues, bankruptcies and major movers.
New Issues in the last week of Preferred Stocks and Exchange Traded Debt (ETD)
In the last week we have had 2 new issues begin trading.
1st off Giant Utility Southern Company (ticker:SO) issued a investment grade debenture. These Baby Bonds ($25/share) carry a coupon of 6.25%.  This coupon is a relatively high coupon for a quality issue for those looking for a reasonable quarterly check.

2ndly large MLP Targa Resources Partners LP (ticker:NGLS) floated a fixed to floating rate preferred unit issue with a initial fixed coupon of 9%.  Targa Resources Partners is a large midstream MLP with over 22,000 miles of gathering system and pipeline, primarily devoted to natural gas. Of course the the energy markets have been hammered hard in the last year, but for those with an eye toward the long term and a risk/reward that is pretty reasonable maybe this issue is for you.

Travel center operator TravelCenters America LLC (ticker:TA) has sold a new $25 Baby Bond. The bonds have a coupon of 8% and began trading on Friday and are trading just below par value.  TA is a nicely profitable operation, although these bonds are unrated we believe them to be of decent quality.  TA has 2 other baby bond series outstanding and they should be reviewed by potential investors prior to making a decision on which may be best for their situation.
Last Weeks Highlights
Undoubtably the highlights for the week was the sharp rebound in the preferred shares of some of the energy issues..

Shares of Gastar Exploration (ticker:GST) , Brietburn Energy (ticker:BBEP), Legacy Reserves (ticker:LGCY) and Vanguard Natural Resources (ticker:VNR) all bounced big as the price of crude oil moved sharply higher (for no fundamental reason). Depending on the issue prices of the preferreds were up by 30-60%.

For some of these issue the move in crude oil prices from the lower $40’s up almost to $50 is not a hugely meaningful event—they will need much higher prices (at least $10) to be able to maintain distributions a year from now.
Dividend Suspensions
After the market close on Friday Magnum Hunter (ticker:MHR) suspended all dividends on their preferred shares.
Just 3 weeks ago we had written on the oil issues and in particular Magnum Hunter—for many owning these issues in not income investing–it is just speculation–a substitute for going to the casino. Nothing wrong with speculating as long as you understand the huge risk involved in many of these issues.
These preferred shares were trading at a fairly low level as most investors suspected that the suspension might be coming. The reaction may be modest because of this when trading resumes on Monday.
The Yield Hunter  

Tim McPartland

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Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
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