Corporate and Agency GSE Bond DEALS and NEW ISSUES

[imbatman]

I picked up a little corporate note today on FIDO secondary (still more and other varieties available):

718547AW2 5.65% (priced at 5.74%) Phillips 66 A3/BBB+ 30-Year, Make Whole Call

 

[wolf]

Right now Vanguard has Federal Home Ln Mtg Corp Callable 01/25@100 for 5.55% YTW 5.547% matures 2044 but that agency is not state tax exempt. The next best is Federal Home Loan Bank Callable 06/25@100 for 5.69% matures 2038 YTW is 4.823% and is state tax exempt. Without logging in I don't know the CUSIPs. So Vanguard is showing new entries on the secondary market day by day.

Vanguard, Does not offer "new issue" Agency. Only 2ndary market. That is why it is confusing to you
and me.

Fidelity does offer new issue Agency. So it is pretty straightforward. You may have to bite the bullet and
open another Brokerage account. (Have Vanguard and Fidelity).

 

[Montecfo]

Have y'all noticed any improvement in interest rates since jobs report?

 

[imbatman]

Definitely all my saved searches finally have inventory again I would guess rates up about 0.15-0.25% on the stuff I look at throughout the day (mainly munis and corporates right now)

 

[imbatman]

Anyone had experience with a bond having both Make Whole Call AND Extraordinary Redemption (ER) AND Sinking Fund Protection?

If your particular notes get selected for ER (not really a call per se) or Sinking Fund redemption (not really a call per se), do they have to Make Whole?

The one I was curious about (92818GJN4), I couldn't find the original offering statement and it doesn't have a call schedule, so seems like the Make Whole must be for the ER or SFP as they have no other call listed (no date or continuous)......but don't like making assumptions.

Found a possible answer to this accidentally today....of course, the final answer is to be found in the bond offering terms but in general, they make it sound like ER provisions do not usually result in requiring the holder to be made whole, even if a bond may have such a provision for a make whole call.

https://www.msrb.org/sites/default/files/2024-04/Possible-Redemption-of-Build-America-Bonds.pdf

 

[Healthy Lifestyle]

I am looking for higher yield and for first time considering this FHLoanBank Bond?
Appreciate any thoughts if good or bad? Thanks.
CUSIP: 3130B37E7, First Coupon: 04/17/2025,
Callable After 10/17/2025

hanks
	SEMI-ANNUALLY
Coupon	5.120
Maturity Date	10/17/2034
Moody's Rating	AAA
S&P Rating	AA+
Issuer Events	NO
Survivor Option	NO
Bond Type	Agency
Interest Accrual Date	10/17/2024

 

[imbatman]

Not remarkable to me due to its rate / call in one year. Nothing WRONG with it, but if I was getting a new issue agency, I would be buying 3130B3BE2 - same bank with same 1-year call but 5.55% starting 10/21.

Mine is 2044 mature, yours is 2034 mature.....which is why the better coupon. To my mind, neither of these is going to maturity but I know not everyone agrees with that...........

If you are in non-taxable account and willing to risk a small premium price with an extraordinary redemption TAXABLE muni....I picked up a little of this today:

60416UHU2 Minnesota Housing AA1 5.85% (but 5.75% @ $100.65 price)....25-year but first call in 2033 (but IMO will be ER before that)......risk is if it gets ER'd next week, you won't have earned enough interest to cover the $0.65 premium (per bond) you paid.

 

[Graybeard]

Not remarkable to me due to its rate / call in one year. Nothing WRONG with it, but if I was getting a new issue agency, I would be buying 3130B3BE2 - same bank with same 1-year call but 5.55% starting 10/21.

Mine is 2044 mature, yours is 2034 mature.....which is why the better coupon. To my mind, neither of these is going to maturity but I know not everyone agrees with that...........

If you are in non-taxable account and willing to risk a small premium price with an extraordinary redemption TAXABLE muni....I picked up a little of this today:

60416UHU2 Minnesota Housing AA1 5.85% (but 5.75% @ $100.65 price)....25-year but first call in 2033 (but IMO will be ER before that)......risk is if it gets ER'd next week, you won't have earned enough interest to cover the $0.65 premium (per bond) you paid.

Drawing a blank, what is ER? Early retired?

 

[PhotoAviation61]

ER = Extraordinary Redemption.

 

[Healthy Lifestyle]

Not remarkable to me due to its rate / call in one year. Nothing WRONG with it, but if I was getting a new issue agency, I would be buying 3130B3BE2 - same bank with same 1-year call but 5.55% starting 10/21.

Mine is 2044 mature, yours is 2034 mature.....which is why the better coupon. To my mind, neither of these is going to maturity but I know not everyone agrees with that...........

If you are in non-taxable account and willing to risk a small premium price with an extraordinary redemption TAXABLE muni....I picked up a little of this today:

60416UHU2 Minnesota Housing AA1 5.85% (but 5.75% @ $100.65 price)....25-year but first call in 2033 (but IMO will be ER before that)......risk is if it gets ER'd next week, you won't have earned enough interest to cover the $0.65 premium (per bond) you paid.

Thank you Batman. I am retired 67. Not sure how long I am comfortable going long maturities.

 

[erkevin]

Thanks Batman. I picked up a good chunk of 3130B3BE2 this morning.

 

[erkevin]

Just stumbled across this one on Schwab's inventory: 3130B3A86. Another FHLB. Coupon is 5% (YTM is 4.992%) for 20 years and the 1st call date is October of 2027.

 

[imbatman]

25161FWK0 Deutsche Bank 5.75% 20-year with 2-year call protection (callable starting 10/31/26)

 

[olyveoil]

Looking at some lower ratings. This CUSIP

69120VAZ4

States make whole call in 2031 on Schwab summary. However, on disclosures states "Until 15 JAN 2031, Make-Whole Call at US Treasury plus 45 basis points." Meaning? Bond could be called to include Par + Us treasury rates +45 BP for all coupons until Jan 15, 2031?

 

[njhowie]

Looking at some lower ratings. This CUSIP

69120VAZ4

States make whole call in 2031 on Schwab summary. However, on disclosures states "Until 15 JAN 2031, Make-Whole Call at US Treasury plus 45 basis points." Meaning? Bond could be called to include Par + Us treasury rates +45 BP for all coupons until Jan 15, 2031?

Why? Do you know of the company? Familiar with their business? Understand the risks?

 

[olyveoil]

Yes. I know of the company. I understand barely investment grade risk. Question stands on the precise meaning of "Until 15 JAN 2031, Make-Whole Call at US Treasury plus 45 basis points."

 

[imbatman]

I would take it the same as you do. Make whole calls often have a formula on how they "make you whole" and isn't always as simple as just paying you the present value of future interest.

 

[njhowie]

Yes. I know of the company. I understand barely investment grade risk. Question stands on the precise meaning of "Until 15 JAN 2031, Make-Whole Call at US Treasury plus 45 basis points."

They can call at any time prior to that date paying you the greater of a) 100 or b) the principal plus all future interest payments discounted by the (applicable) US Treasury rate plus 0.45%.

Being the current price is around 101, this is nothing to be concerned with in my view. Absolute worst case, you'd receive 100. In general, when you need to be concerned about the Make Whole call is when you purchase a bond that is trading a fair amount above 100. Depending how long until maturity, discounting the face value/principal can lead to a total amount less than 100, and so accepting 100 could result in a moderate loss.

 

[pb4uski]

I would take it the same as you do. Make whole calls often have a formula on how they "make you whole" and isn't always as simple as just paying you the present value of future interest.

From another thread quite a while ago:

... Say you buy a $10,000 5-year 3.5% callable CD.

After 3 years the issuer calls it and at the time interest rates for 2-year CDs are 2%.

If the issuer had not called the CD then at the end of 5-years you would have received $11,877 [10,000*(1+3.5%)^5].

At the current interest rate of 2% that you would reinvest the call proceeds in, in order to have $11,877 at the end of two years you would need to receive $11,416 today [(11,877/(1+2%)^2].

The CD with accrued interest is currently $11,087 [($10,000*(1+3.5%)^3].

So when the CD is called the issuer pays you $10,000 principal, $1,087 of accrued interest and a $329 make-whole call penalty for a total of $11,416.

You reinvest the $11,416 for 2 years at 2% and at the end of 2 years have $11,877... the same as if the issuer had not called the CD... so you have been "made whole".

 

[pb4uski]

Just nibbled at this FHLB new issuance. No sure how long it will last before being called, but at 6.25% I'll enjoy the ride for however long it lasts.

CUSIP 3130B3MS9
Security Type Government Agencies
Issuer Name FEDERAL HOME LN BKS
Maturity Date 11/12/2054
Coupon Rate 6.250%
Coupon Type Fixed
Coupon Frequency Semi-annually
Accrual Day Count 30/360
Dated Date 11/12/2024
First Settlement Date 11/12/2024
First Coupon Date 05/12/2025
Callable in whole or part Quarterly beginning 02/12/2025 with 5 days notice.

 

[imbatman]

Yeah it is definitely turned back to feast mode in bonds these last few weeks. I have been upgrading some of my coupons and making some changes.

 

[Healthy Lifestyle]

Just nibbled at this FHLB new issuance. No sure how long it will last before being called, but at 6.25% I'll enjoy the ride for however long it lasts.

CUSIP 3130B3MS9
Security Type Government Agencies
Issuer Name FEDERAL HOME LN BKS
Maturity Date 11/12/2054
Coupon Rate 6.250%
Coupon Type Fixed
Coupon Frequency Semi-annually
Accrual Day Count 30/360
Dated Date 11/12/2024
First Settlement Date 11/12/2024
First Coupon Date 05/12/2025
Callable in whole or part Quarterly beginning 02/12/2025 with 5 days notice.

I see the possible callable dates and ytd looks good for 6 months.

Does the 2054 maturity date have downside concern for us older people?

Would you put ~200K in this 6.25% FHLB?

 

[aja8888]

I see the possible callable dates and ytd looks good for 6 months.

Does the 2054 maturity date have downside concern for us older people?

Would you put ~200K in this 6.25% FHLB?

As an Octogenarian, I'm not buying stuff with maturity dates out past 10 years. But each to his/her own!

 

[imbatman]

I don't see the downside if you are happy with 6.25% (which is crazy good, particularly in a high tax state). You can sell on secondary market if you unexpectedly need the principle early....probably for a small gain but in the incredibly unlikely scenario that market rates at the time are higher than 6.25%....you may have to take a little haircut to sell at a market rate.

IMO the real downside is if rates temporarily go up a little more and you miss the opportunity to buy a fund with a much longer call date and lock in these higher rates for longer. (Of course, again, you could easily sell - the agency bonds are pretty darn liquid).

 

[Montecfo]

That's just a really long time but a nice rate, currently. But 10, 20, 30 years down the line?