New Preferred Stock And Exchange Traded Debt IPOs, April 2024

New offering summaries

Internally managed Business Development Company (BDC), Trinity Capital Inc. (TRIN), priced an offering of $100 million worth of new 7.875% notes due 2029. The new notes were rated BBB by both Egan-Jones and Morningstar, trade on the Nasdaq under the symbol TRINZ. The company may optionally redeem the new notes in March of 2026.

Affiliated Managers Group (AMG) priced an offering of $400 million worth of new 6.75% junior subordinated notes due 2064. The new notes can be redeemed at par at the company’s option in March of 2029. Credit ratings of Baa1 and BBB- were achieved, from Moody’s and S&P respectively, and the new notes are now trading on the New York Stock Exchange under the symbol MGRE.

Eagle Point Income Company (EIC), an investor in collateralized loan obligation (CLO) securities, priced an offering of $30 million worth of new series C term preferred stock due 2029, offering a fixed dividend rate of 8%. The new shares were rated BBB by Egan-Jones Ratings Company. Dividends will be paid monthly until redemption or early call, with the shares callable in April 2026. The new shares traded temporarily on the OTC under the symbol EAGPV before moving to the permanent symbol EICC on the New York Stock Exchange.

Externally managed BDC Great Elm Capital Corp. (GECC) priced an offering of $30 million of new 8.5% exchange-traded notes due 2029. The company may redeem the notes early in April 2026 at its option. The company indicated that proceeds will go in part towards making new portfolio investments, and proceeds may also go towards repurchase or redemption of part of the company’s existing debt. The new notes were rated BBB by Egan-Jones Ratings Company and trade on the Nasdaq under the symbol GECCI.

And residential mortgage investor MFA Financial (MFA) priced an offering of $75 million of new 9% exchange traded senior notes due 2029. The company may redeem the notes early in August 2026 at its option. The new notes were rated BBB- by Egan-Jones Ratings company and trade on the New York Stock Exchange under the symbol MFAO.

Of the various offerings summarized above, one of them, MGRE, achieved a perfect CDx3 Compliance Score. Long-time readers of our Seeking Alpha articles may already be familiar with our compliance scale and what it means to rank 10 out of 10, but for those readers who may be new to CDx3 compliance as a framework for selecting quality preferred stocks, the following elements must match or exceed our target: dividend rate, time until call date, cumulative unsuspended quarterly dividend, investment grade credit rating, US issuer, non-convertible, prospectus availability, and $25 par value.

SEC filings for further information: TRINZ, MGRE, EICC, GECCI, MFAO

Buying new shares for wholesale

Preferred stock IPOs often involve a temporary period during which OTC trading symbols are assigned until these securities move to their retail exchange, at which time they will receive their permanent symbols. For example, the new Eagle Point Income Company preferred discussed above, which initially traded under the symbol EAGPV on the OTC:

Individual investors, armed with a web browser and an online trading account, can often purchase newly introduced preferred stock shares at wholesale prices just like the big guys (see “Preferred Stock Buyers Change Tactics For Double-Digit Returns” for an explanation of how the OTC can be used to purchase shares for discounted prices).

Those who have been following this strategy of using the wholesale OTC exchange to buy newly introduced shares for less than $25 are more able to avoid a capital loss if prices drop (if they choose to sell). Note that in the case of the new Eagle Point Income Company preferred, on 4/1/2024 shares were changing hands around $24.55; as of this writing EICC is trading at $24.92.

Your broker will automatically update the trading symbols of any shares you purchase on the OTC, once they move to their permanent symbols. A special note regarding preferred stock trading symbols: Annoyingly, unlike common stock trading symbols, the format used by exchanges, brokers and other online quoting services for preferred stock symbols is not standardized.

For example, a given Series A preferred stock might have a symbol ending in “-A” at TD Ameritrade, Google Finance and several others, but this same security may end in “PR.A” at E*Trade and “.PA” at Seeking Alpha. For a cross-reference table of how preferred stock symbols are denoted by sixteen popular brokers and other online quoting services, see “Preferred Stock Trading Symbol Cross-Reference Table.”

Past preferred stock IPOs below par

In addition to covering new preferred stock and ETD offerings, here at CDx3 we also track past offerings, with alerts when securities fall below their par values. Year-to-date, our “bargain table” count of the highest quality preferred stocks and ETDs available at a discount to par value, remains elevated at a count in excess of 150:

We track when different preferred stocks and exchange traded debt securities become available below par in market trading, and to close this article, we would like to share with you some of the most recent dips/crosses below par we have observed among individual securities (note that yellow highlighted entries indicate highly rated securities eligible for the “CDx3 Bargain Table”):

For those preferred stock (and ETD) investors interested not just in new IPOs but previously issued securities, following par crosses can provide useful insight into which securities have recently become available in the marketplace below their initial offering prices.

Investor Takeaway

In our monthly Seeking Alpha articles, we here at CDx3 Notification Service typically summarize all the new preferred stock and exchange traded debt offerings observed over the course of the month; we also highlight past offerings that have begun to trade below par value. Our goal is to keep fixed-income investors up-to-date on the various investments available in the current marketplace, and we hope this month’s article has served this purpose. See you next time, and thanks for reading!

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.