Ncc-pf

[charlie]

Hi to all,

I recently sold my modest position in KRE (Regional Banking Index) and
bought National City Corp preferred series F. This stock pays 9.875%
fixed rate until 2/1/2013 when it switches to 3 month LIBOR plus
6.33%. The stock has no maturity date and first call is 2/1/2013 at $25.
It was rated BBB+ on 2/08/2008. The market price is around $22 which
makes the current yield about 11.2%. The yield to call would be roughly
about 14%.

This looked like a sweet deal to me as it beats my equity return goal
of at least 10% with bond like risk.

I would appreciate any comments you care to make .... especially from
Brew. I would like to buy more if the consensusl is favorable.

Cheers,

charlie

 

[bssc]

I own NCC stock. It is highly speculative position. I suspect that the high return on the preferred stock reflects the feeling that they are undercapitalized so you are assuming a higher risk.

 

[clifp]

I have been writing NCC options recently (to take advantage of the tremendous volatility) and a few years ago owned the stock briefly.

Charlie as I am sure you know there is a real chance that NCC might fail, if the Ohio real estate market continues to worsen. I'd be interested in Brewer's comments also, but I think it would be worth while to look at Country Wide and IndyMac bonds and preferred to get an idea what your stock maybe worth in the event NCC goes under.

I've been looking at a similar security from a far more secure bank. JP Morgan (JPM-Z) preferred 8% coupon until 2013 than switches to 3 month LIBOR + 4.12% it is currently trading a bit over par ~$26, so current yield is around 7.7% Obviously a big difference in current yield and YTM. If the credit market returns to normal the NCC preferred has 220 basis advantage on the other hand I prefer JP Morgan's balance sheet to NCC's

 

[REWahoo]

volatility
IndyMac​

Libor​

NCC's​

My we are colorful today, aren't we?

EDIT: On second thought, maybe not...

 

[clifp]

Ya hit submit while in spell check mode

 

[cute fuzzy bunny]

I think what you're getting there is equity like returns with equity like risk Charlie.