Recapping Income Securities For The Last Week

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Get Caught Up on the Income Security News You Missed Last Week
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 preferred issues announced.  Neither are trading at this point and their OTC Temporary Tickers have not been announced.

1st off apartment REIT Bluerock Residential Growth REIT (ticker:BRG) sold a new issue of preferred stock with some desirable features.  The shares have a high yield of 8.25% and assetcoverage requirement of 200% and a put feature (you can force a redemption)
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2ndly manufactured home community REIT UMH Properties has sold a perpetual preferred issue with a good coupon of 8%.  In spite of what a person thinks about mobile homes this has been a pretty darned good business for UMH

 
 

The 3 new issues that hit the market last week have traded as follows—

 

Southern Company 6.25% Subordinated Notes closed last week at $25.80–a nice gain for the 1st week. A quality issue and obviously investors are still hungry for investment grade issues.

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Targa Resources Partners LP 9% fixed to floating preferred issue closed last week at $25–it continues to trade on the OTC Gray Market. Targa is a pretty solid MLP midstream company, but just the same we are steering clear.  Maybe the reward is adequate for some.

 

TravelCenters of America 8% Senior Notes are trading at $25.02.  This was a predictable trade given that TA has 2 other issues outstanding (1 is 8.25% the other 8%) and there is little difference in the issues excepting 1st call dates and maturities.  This is a decent (although unrated) issue that may have 1% upside to it yet.

 

Income Issue News Items
 
The were a couple of noteworthy items in the income investing arena this past week. 1st off it was announced late Friday that REIT Campus Crest (ticker:CCG)is to be acquired. Campus Crest has a preferred issue outstanding that currently has dividends suspended.  Our understanding is that the issue will be REDEEMED in early 2016. Shares are now trading around $24 and should be redeemed in the $27 area.  There may be a small opportunity for a gain of 5-6% in 4 months here.
 
Little Energy company FX Energy (ticker:FXCN) is being bought and has a convertible preferred that is being redeemed at $25 if the deal closes.  Shares were trading at $19 last Monday but jumped to around $24–a nice speculative profit. We don’t follow convertible issues–also we don’t speculate.
 
 
Economic News for the Coming Week
 
This will be a quiet week for important economic news in the U.S.
 
On Tuesday we have Housing Starts Announced as well as the Redbook report on retail sales at department and chain retail outlets as well as department stores. Retail sales have been falling all year and our guess is this will continue and will keep the 10 year treasury at the current low level.
 
On Wednesday we have just the EIA petroleum inventories–they took a massive jump last week, although crude prices didn’t tumble hard on the news. We would think that crude oil prices would continue to move back down this week which is likely to put common stocks in the energy area under pressure.
 
Thursday brings jobless claims, Chicago Fed activity report, the Bloomberg Consumer Comfort report, existing homes sales and the Leading Indicators report.  We believe these will all comfirm a slowdown in the economy and will be taken in stride as investors are already baking in a soft economy–witness the 2.02% 10 year treasury.
 
Friday brings only the PMI Manufacturing Index and this will be soft also as every regional manufacturing index reading in the last month has been pitiful.
 
Likely the biggest item in the common stock arena will be earnings announcements as over 100 S&P 500 companies report this week.  A large number of negative reports will serve to keep interest rates in check and we will watch for indicators of a coming recession.
 
The Yield Hunter  
 
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