New preferred stock and listed bond IPO in May 2024

New offering summary:

M&T Bank Corporation (Mountain bike) has priced an offering of $750 million of new Series J non-cumulative preferred stock offering a fixed dividend rate of 7.5%. The new shares are rated by Moody’s, S&P, Fitch and DBRS are Baa3, BB+, BBB- and BBB, respectively. The new shares temporarily traded on the OTC under the symbol MTDJV and then transitioned to the permanent symbol MTB-J on the New York Stock Exchange.

Citizens Financial Group (CFG) is offering $400 million of its new Series H non-cumulative preferred stock, offering a fixed dividend rate of 7.375%. The new shares are rated Baa3 with a negative outlook, BB+ and BB by Moody’s, S&P and Fitch, respectively. The new shares will temporarily trade in the over-the-counter market under the symbol CFGPV and will then trade in perpetuity on the New York Stock Exchange under the symbol CFG-H.

AG Mortgage Investment Trust (Mitt) has priced its offering of $65 million of new 9.5% (fixed rate) senior exchange-traded fund notes due 2029. The notes are redeemable at the company’s option in May 2026. Egan Jones Ratings has assigned a credit rating of BBB- to the notes. The new notes are trading on the New York Stock Exchange under the symbol MITP.

Chimera Investment Co., Ltd.CMCIMN, the New York Stock Exchange’s largest lender, has priced its offering of $65 million of its new 9% (fixed rate) senior exchange traded funds notes due 2029. The company said it will use a portion of the proceeds to acquire mortgage assets, including residential mortgages, non-agency RMBS, agency RMBS and agency CMBS. The notes are redeemable at the company’s option in May 2026. The new notes are trading on the New York Stock Exchange under the symbol CIMN.

Southern California Edison, part of Edison InternationalAex) has priced its offering of $350 million of new trust preferred stock, offering a fixed dividend rate of 6.95%. The new shares are rated Baa3, BB+ and BBB- by Moody’s, S&P and Fitch, respectively. The new shares will temporarily trade on the OTC under the symbol SCEXP and eventually transition to the permanent symbol SCE-N on the New York Stock Exchange.

Of the various offerings summarized above, SCE-N achieved a perfect score on the CDx3 Compliance Score. Long-time readers of Seeking Alpha may already be familiar with our Compliance Scale and what a 10 out of 10 rating means, but for readers new to CDx3 Compliance as a framework for selecting quality preferred stocks, factors such as dividend yield, time to call date, no cumulative suspension of quarterly dividends, investment grade rating, U.S. issue, non-convertible, availability of prospectus, and $25 par value should match or exceed our targets.

For more information, please see our SEC filings: MTB-J, SCE-N, CFG-H, MITP, CIMN

Purchasing new stock for wholesale

Preferred stock IPOs are often assigned an OTC trading symbol for a temporary period until these securities are transferred to retail exchanges, after which a permanent symbol is assigned. For example, the new M&T Bank preferred stock mentioned above initially traded on the OTC under the symbol MTDJV.

Individual investors with a web browser and an online trading account can often buy newly introduced preferred stock at wholesale prices, just like larger investors.Preferred stock buyers change strategy for double-digit gainsTo learn how to use OTC to buy stock at a discount, see .

Those who have followed this strategy of using wholesale OTC exchanges to buy newly introduced shares at $25 (or below) whenever possible will likely avoid capital loss if the price drops (if they choose to sell). In the case of the new M&T Bank Preferred Stock, note that on May 8, 2024, shares were trading at around $25.03. As of this writing, MTB-J is trading at $25.40.

Brokers will automatically update the trading symbols of stocks purchased OTC as they transition to the permanent symbol.Special Note About Preferred Stock Trading Symbols:Unfortunately, unlike common stock trading symbols, the format of preferred stock symbols used by exchanges, brokers, and other online quoting services is not standardized.

For example, a Series A preferred stock may be listed with a symbol ending in “-A” on TDAmeritrade, Google Finance, etc., but the same security may end in “PR.A” on E*Trade and “.PA” on Seeking Alpha. For a cross-reference table showing how preferred stock symbols are listed on 16 popular brokers and other online quote services, seePreferred Stock Trading Symbol Cross Reference. “

Previous preferred stock IPOs have been below par

In addition to new preferred and ETD offerings, CDx3 also tracks past offerings and alerts when securities sell below par value. There have been many such over-price over-price over the year, with CDx3-compliant “baskets” trading at roughly a 4.7% discount to par value as of this writing. Current market yields offered by CDx3-compliant preferred stocks have generally trended upwards year-to-date, increasing from a low of roughly 6.1% in January to current levels of 6.44% as of this writing.

We track when various preferred stocks and publicly traded debt securities become available below par in market transactions. To conclude this article, we would like to share with you some of the recent dips/crossovers below par that we have observed in individual securities (items highlighted in yellow indicate highly rated securities that qualify for the “CDx3 Bargain Table”).

For preferred stock (and ETD) investors who are interested in new IPOs as well as previously issued securities, tracking par crosses provides useful information to see which securities have recently become available in the market at prices below their original offering prices.

Investor View

In our monthly Seeking Alpha article on the CDx3 Notification Service, we typically summarize all new preferred stock and publicly traded debt issuances identified during the month. We also highlight past issuances that began trading below par value. Our goal is to provide fixed income investors with up-to-date information on the various investments available in the current market. We hope this month’s article achieves that goal. See you next time. Thanks for reading!