ASB - Associated Banc-Corp: Baby Bond Presents Best Income Option

2024-05-16 13:43:18 ET

Summary

• Associated Bancorp is not adverse to some of the challenges faced by the regional banking sector.
• The bank offers a baby bond that is currently trading at a higher coupon yield than the bank's preferred share dividends.
• There are risks to be mindful of involving the bank and the baby bond's reset rate prior to investing.

Associated Banc-Corp ( ASB ) is a regional bank that is working through the challenges of maintaining deposits and increasing interest expenses faced by the industry. The bank is one of a few that offers a baby bond ( ASBA ). A baby bond is a debt instrument, which trades on an exchange and can only be impaired by a default. I covered the Associated Banc-Corp baby bond back in December and decided to revisit my thesis. Currently, the bond is trading at a higher coupon yield than the bank’s preferred shares, and I believe income investors should consider adding it to their portfolio....

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