Corporate and Agency GSE Bond DEALS and NEW ISSUES

[COcheesehead]

Is right now, especially after today's rally still a great entry point for leveraged CEF or many signs or pointing it for a pull back?

They have been in a pullback for two years.

 

[imbatman]

Whew that draining sound today as much of the inventory on my screeners dried up on Fido's secondary bond market after the Fed announcement.....

 

[COcheesehead]

I was pulling callable bonds forward out as far as two years from now to take advantage of the rates prior to today. I am pretty much all.
Now you have everybody and their brother out to buy duration and yield.

 

[JC888]

They have been in a pullback for two years.

Are these CEF - WDI, basically very similar to those long duration bond ETF but on steroids due to leverage?

 

[COcheesehead]

Are these CEF - WDI, basically very similar to those long duration bond ETF but on steroids due to leverage?

No, the durations can vary, just like any other bond fund. WDI’s is 4.79 years in duration.

 

[dobig]

The CEFs are interesting now, especially at a discount. If you believe as I do that we are in a declining rate environment, the CEF benefits 2 ways:

-Lower interest rates reprice the cash flow stream so the NAV rises
-Lower interest rates may lower the cost of credit increasing dividends net of expenses.

We could be entering a golden period for discounted closed end funds.

I have both UTF and UTG I bought at good discounts but having trouble finding some others at a discount I feel comfortable with. Any you like you'd be willing to share?

 

[imbatman]

To be precise, WDI's discount to NAV has not evaporated (still at 8.5% as of yesterday's close)....but the above average discount has eroded such that it is back into its more typical range from the last 2 years

https://cefdata.com/funds/wdi/

 

[COcheesehead]

To be precise, WDI's discount to NAV has not evaporated (still at 8.5% as of yesterday's close)....but the above average discount has eroded such that it is back into its more typical range from the last 2 years

https://cefdata.com/funds/wdi/

I like it. I have made some good money with WDI. Hard to beat 11%-12% dividends with capital appreciation. It’s has jumped about 3%+ in just the last two days.

 

[PhotoAviation61]

And so it begins. Just received an agency bond call. 3133EPNE1 FFCB 6.375%.

Looked at the FFCB website and it lists 4 bond calls announced Dec 15. Coupons of 6.375%, 5.94%, 6.4%, and 6%.

 

[imbatman]

yup got me too, it is what I figured going into it so I enjoyed it while it lasted

 

[pb4uski]

+1 got me too, along with a partial call on C/PRJ preferred stock.

 

[imbatman]

Well if you want short term placement, FFCB has on Fido today 3133EPQ24 6.15% 15-year with call in March 2024. Better than money market at least and likely no issue selling at any point (I saw 6.05% agencies get scooped up quick today).

 

[jldavid47]

Well, in the past few days I've had one FHLB note called and two others survive a call:

Called:
FHLB 5.58% due 12/20/2024, CUSIP 3130AWCL2 (Purchased 6/20/23)

Not Called:
FHLB 5.55% due 06/20/2025, CUSIP 3130AWG46 (Purchased 6/20/23)
FHLB 5.50% due 12/22/2025, CUSIP 3130ATZS9 (Purchased 12/22/22)

I find it odd that the 5.58% note was called but not the 5.55% note. Whatever. They have their reasons.

 

[pb4uski]

^^^ Exactly, I have long given up on trying to figure out the method to their madness.

 

[imbatman]

I wish FHLB had a nice URL to see called bonds similar to FFCB. I just got a FHLB call notice from Fido (3130AVDP4 6.44% not callable until 12/22) and was curious the exact call date and couldn't find it on their website.

 

[Montecfo]

I have both UTF and UTG I bought at good discounts but having trouble finding some others at a discount I feel comfortable with. Any you like you'd be willing to share?

I have not really looked a lot yet. But I would think even an average discount in this environment has a great chance of narrowing meaningfully as rates decline.

Lots of movement over the past week.

But the high yield space in general I think is interesting. Preferreds, O&G midstream and pipelines, high yield bonds (funds only) seem to be ripe for research.

 

[MichaelB]

Typically, how much notice do issuers give when calling?

 

[pb4uski]

Disclosure Note for CUSIP - 3134GYTH5

Date	Type	Note
06/21/2023	Secured Text	The Medium Term Notes are unsecured general obligations of Freddie Mac.
06/21/2023	Call Terms/Schedule	Notice of optional redemption will be given to Holders of the Notes not less than 5 Business Days nor more than 60 calendar days prior to the date of redemption.

 

[imbatman]

Typically, how much notice do issuers give when calling?

At least for FFCB, it has always ranged from about 7 to 14 days notice. You can see the notice dates and call dates here:

https://www.farmcreditfunding.com/ffcb_live/dataCenter/termDebtActivity.html#recentlyCalledTab

I just found a page for FHLB, and they only show called securities up to 8 days out right now and don't show a call I just got this evening (3130AVDP4) FWIW:

https://www.fhlb-of.com/ofweb_userWeb/pageBuilder/call-schedule-84

 

[PhotoAviation61]

New issue at Fidelity.

CIBC MTN FIXED TO FLOAT , 7.00% FIXED 6MO THEN SOFR +1.00%, NO CAP Matures June 2027. 13607X909

Any thoughts?

 

[njhowie]

New issue at Fidelity.

CIBC MTN FIXED TO FLOAT , 7.00% FIXED 6MO THEN SOFR +1.00%, NO CAP Matures June 2027. 13607X909

Any thoughts?

Keep in mind that fixed to float benefits the issuer when rates (are expected to) go lower.

SOFR is currently 5.32% and very likely to head lower. So, in 6 months figure your rate will likely be no more than 5.5% to 6%.

CIBC bonds are rated A and better and at this time for A-rated or better bonds in the 3 to 4 year range, we're looking at 4.7% to 5.4%.

So, I'd say it's a good risk/reward if you are interested in a 3 to 4 year maturity time frame.

 

[MichaelB]

Disclosure Note for CUSIP - 3134GYTH5

Date	Type	Note
06/21/2023	Secured Text	The Medium Term Notes are unsecured general obligations of Freddie Mac.
06/21/2023	Call Terms/Schedule	Notice of optional redemption will be given to Holders of the Notes not less than 5 Business Days nor more than 60 calendar days prior to the date of redemption.

At least for FFCB, it has always ranged from about 7 to 14 days notice. You can see the notice dates and call dates here:

https://www.farmcreditfunding.com/ffcb_live/dataCenter/termDebtActivity.html#recentlyCalledTab

I just found a page for FHLB, and they only show called securities up to 8 days out right now and don't show a call I just got this evening (3130AVDP4) FWIW:

https://www.fhlb-of.com/ofweb_userWeb/pageBuilder/call-schedule-84

Thanks.

 

[imbatman]

CIBC MTN FIXED TO FLOAT , 7.00% FIXED 6MO THEN SOFR +1.00%, NO CAP Matures June 2027. 13607X909

Great feedback from njhowie, that 6-months @ 7% is tempting even just for resale sometime next year.....FYI, found these SOFR rate projections (all getting to low 3% in the next 2 years) which helped temper the temptation for me a little

https://www.chathamfinancial.com/technology/us-forward-curves
https://econforecasting.com/forecast-sofr
https://www.pensford.com/resources/forward-curve

 

[imbatman]

Shocked to see but new on Fido this afternoon:
3133EPS48
FFCB
6.32%
Maturity: 20-Year
First Call: 3-months (March 28)
Issue Date: December 28

I definitely picked up to replace called versions paying out the day prior

 

[jldavid47]

Shocked to see but new on Fido this afternoon:
3133EPS48
FFCB
6.32%
Maturity: 20-Year
First Call: 3-months (March 28)
Issue Date: December 28

I definitely picked up to replace called versions paying out the day prior

It's also available on Schwab. If you want to give up a bit of yield to stretch out the call date there is this one as well:

3133EPS30
FFCB
5.94%
Maturity: 20-Year
First Call: 12-months (1/8/25)
Issue Date: 1/8/24