BDC - New Exchange-Traded Debt IPOs September 2023

2023-10-03 02:30:15 ET

Summary

• September saw no new preferred stock offerings, but three ETD offerings began trading with dividend yields ranging from 7.625% to 8.5%.
• CDx3 preferreds ranked 10 out of 10 are selling at an average discount to par of about 8.5% and offer an average current yield of 6.43%.
• Past preferred stock IPOs are now trading below par, with a surge in the "Bargain Table" count reaching near all-time highs.

* September saw no new preferred stock offerings but three ETD offerings began trading, with dividend yields ranging from 7.625% to 8.5%.

* Here is a comparison against the highest quality preferred stocks in our coverage universe, as ranked by our internal "CDx3 Compliance Score" metric.

* CDx3 preferreds ranked 10 out of 10 are meanwhile selling for an average discount to par of about 8.5% and offer an average current yield of 6.43%.

* Past preferred stock IPOs now trading below par: a look at recent par crosses.

New offering summaries:

Asset management firm Apollo Global ( APO ) priced an offering of $600 million worth of 7.625% fixed-rate resettable junior subordinated notes due 2053, where the initial coupon was set at a fixed rate of 7.625% against the offering price, until the first call date of December 15, 2028, at which point the notes can either be called or the interest rate will reset to the then-current Five-Year U.S. Treasury Rate plus a spread of 3.226%. The new notes received ratings of A3, BBB, and BBB+ from Moody's, S&P, and Fitch respectively, and trade on the New York Stock Exchange under symbol APOS.

Former Business Development Company ((BDC)) NewtekOne (NEWT), which switched to a financial holding company structure this year following its acquisition of the National Bank of New York, priced an offering of $40 million worth of new 8% fixed rate senior notes due 2028. The notes received a rating of BBB+ from Egan Jones Ratings Company, with a positive outlook. According to NewtekOne CEO Barry Sloane, the demand for the offering was strong, saying, " We are very pleased that in a difficult market environment, in conjunction with Piper Sandler, B. Riley Securities, and Ladenburg Thalmann, we were able to complete an order book within hours of the public announcement of the transaction. " The new notes trade under symbol NEWTI on the Nasdaq.

And PennyMac Mortgage Investment Trust ( PMT ) priced an offering of $50 million worth of new 8.5% senior notes due 2028. The company indicated that a portion of the proceeds may go towards the repurchase or repayment of a portion of PennyMac Corp.'s 5.50% exchangeable notes due 2024. The new notes received a BBB+ credit rating from Egan Jones Ratings Company, and trade on the New York Stock Exchange under symbol PMTU.

SEC filings for further information: APOS , NEWTI , PMTU .

Past preferred stock IPOs below par

In addition to covering new preferred stock and ETD offerings, here at CDx3 Notification Service we also track past offerings, with alerts when securities fall below their par values. When high quality securities fall below par, they end up on our "Bargain Table" - which is presently at a count of 162, hovering near all-time-highs since we began tracking this metric internally in 2015:

This surge in bargain-table-count in recent years has correlated with the rise in the "risk free rate of return" offered by US treasury bonds, such as the 10-year bond, which presently sits at the highest point seen during that same period charted above of July 2015 to present:

To close this article, we would like to share with you some of the most recent dips/crosses below par we just observed in the past few weeks:

See you next time, and thanks for reading!

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