Heh.... started my career working in Banking and saw Prime/Fed Fund rate hit 20% and along the way dead-end to almost 0%. Yes, more costly as rate rises, but rates we were at were artificially low as recovery effort. Fed needs to push rates higher so they have some dry powder available if another recovery is needed. I think the greatest fear the Fed has had of late is what would have have done if they needed to further stimulate the economy for a recovery, pushed Prime to negative? Interestingly, the Fed could be the cause of needing a recovery if they overshoot, and history has seem to indicate that the pendulum always swings too far in either direction, never perfectly in the middle..... Prime/Fed Funds in 4-5% range seems reasonable level to get back to.
That's why I've been cautious on pref's with low coupon rates, especially those without a maturity date. Those things will most likely sit out there forever as those will be cheap compared to newer borrowings. If you bought just for income then no issue, but if you counted on them holding value to sell at some future date, well..... could be interesting.
Decided to buy a few more at the bargain price. Super sized div coming up within a month!
