We highlight ideas and market moves across the income space on an intra-day basis with our subscribers. Below are small extracts of our updates:
In case you missed it earlier, there was a Portfolio update. In Core 1% shift from NID to DSL and a rotation from NCV to NCZ (this last one should have been highlighted when the HI Portfolio rotation was made, sorry for that). NID – a muni CEF – is now at a premium which is unusual and is a small headwind as it’s a term CEF. Worth monetizing its recent distribution rise in my view. DSL is a Multi-Sector CEF and is 40% in EM – an asset class which is unusually cheap relative to US High Yield debt and the fund’s discount is about 10% wider of the Multi-Sector average – also unusual for its history. In HI, 1% move from ANGLX to DSL.
CEF Coverage / UNII for October was updated for PIMCO and Nuveen funds. In the PIMCO taxable space it’s the usual see-saw. This time around most fund saw an increase in coverage, some by a lot – RCS 6-month rolling coverage increased from 50% to 100%. This kind of variability is clearly nonsense – using 6-month rolling periods ensures that you account for the timing differences in semi-annual bond payments. For RCS specifically, the difference could be due to variation in drop income i.e. the income generated by the financing / rolling of TBA MBS holdings or it could be swaps. Whatever it is, it’s not really forecastable. Overall, I would pay very little attention to PIMCO coverage numbers as they are a kind of random number generator. It’s better to use fund leverage, fees and distribution rates as the key criteria of distribution “safety”. It has worked pretty well so far.
CEF leverage levels for the usual fund families were updated. Taxable PIMCO leverage numbers came off the huge levels of the previous month moving back down towards 40% from around a 43% average leverage level which was about 10% higher than the average taxable fund.
PFXNL – the BDC PFX (former Medley) baby bond is only being partially called (based on 17-Nov record date). It looks very attractive at a 5.8% YTM for a 3/2023 maturity.
AGD and WDI were added to the CEF Tool. If there are any other funds missing (outside of the usual known suspects like TSI, BGIO due to NAV issues) then let me know.
WDI is a recently launched multi-sector credit fund. It has a 1.10% fee which is quite steep in the credit space. Unfortunately, the trend in CEFs has been to increase fees – you can see this trend in the PIMCO CEFs that started off around 0.6-0.8% a few decades ago and their more recent funds are at 1.15% (PDO, PCI, PDI). This is obviously at the same time as overall yields have moved lower which means that CEF management fees have eaten up an increasing share of fund income. Maybe CEF shareholders don’t have the same kind of power as BDC shareholders who have enjoyed a steady decrease in fees both base management fees as well as incentive fees. In any case, WDI is also a term CEF with an expected termination date in 2033. The fund is trading at a 4.9% discount which translates to about a 0.47% PTN Yield i.e. the annual headwind you get from discount compressing to zero. This is a best-case scenario as the board can extend termination for 2 years and, obviously, shareholders can always vote to get rid of the termination and turn the fund into a perpetual fund. A 0.47% PTN Yield is on the high side in the space with the average PTN Yield near zero.
WDI will be run at 20-30% leverage with some CLO holdings so it should be on the higher-yielding side in the Multi-Sector space plus the PTN Yield tailwind. So far it looks OK at a 4.9% discount which is about 9% wider of the sector average (surprisingly the median discount is basically identical to the average premium of 3.8% despite funds like PTY that I would have expected to skew the average higher). Obviously, hard to gauge alpha etc. for WDI. It’s too early to gauge performance as it’s still holding quite a bit of cash and doesn’t appear to use leverage. NAV at $19.90 is not far from the $20 IPO. Its duration is expected to be on the low side initially according to the fact sheet. People are probably disappointed with the price performance which is down closet to 6% since the IPO and so may be dumping it. It could be worth picking up some if this keeps going.
It was a busy day in the preferreds space.
Gabelli Utility CEF GUT is redeeming its Series A preferreds GUT-A. The stock was trading near $27 prior to the news which will wipe off more than a year’s worth of dividends. It’s been callable since 2008 so it’s curious why Gabelli waited so long to redeem. There was an article over a year ago where I showed that the combination of high-coupon preferreds and low-dividend assets means equity-focused CEFs like Gabelli basically have zero or negative income which strains the definition of what an “income investment” really means i.e. if a fund has negative NII but an 8% distribution rate is it an income asset or not? What about a fund that holds SPY and pays out a 10% distribution rate? Does that mean the S&P 500 index has just become an income asset? Good philosophical questions to ponder with your loved ones over the Thanksgiving dinner.
mREIT NYMT is issuing 7% Series G (NYMGV temporary ticker, NYMTZ permanent ticker) to redeem NYMTP. Looks like this will be a fixed-rate preferred which is nice because there aren’t many fixed-rate preferreds in the sector. That said, NYMTM has a spread over Libor of 6.429% so the worst case scenario is it will have a coupon of around 6.50% – not far off the 7% of the G. NYMTM will float in 2025 so the breakeven versus G is just two hikes i.e. if the Fed hikes more than 2x then NYMTM will have a higher coupon than G and vice-versa. Two hikes doesn’t feel like a high bar for the Fed so NYMTM looks more attractive than G at par. Of course, there is always the risk that the Fed hikes a bunch which causes another recession and by the time NYMTM floats Libor is back at zero. NYMTM is trading about 1.5% over “par” so that will shave a bit off the yield as well. The appeal of G is in the relatively long call period and fixed-rate. I wouldn’t expect it to rally out of the gate here as it’s well below the yields of the NYMTM and NYMTN.
CLO Equity CEF ECC is issuing another preferred – Series D – no pricing yet. The fact that ECCB just became redeemable is probably not a coincidence. It also highlights why tilting to the highest stripped yield preferreds from relatively commercial / frequent issuers doesn’t make a ton of sense. Eagle Point obviously don’t like leaving money on the table (if nothing else because they hold a lot of the common) and they were able to issue ECCC at a 1.25% lower coupon than ECCB so holding ECCB made very little sense as its yield has been in low single digits for some time. I’d be surprised if D is issued sub-6% – at that point you would just hold CLO Equity baby bonds or maybe EICA.
The pair of BDCs PFLT and PNNT released Q3 numbers after the close. I will focus on PNNT which is in the HI Portfolio though there will probably be more to highlight once the transcript is out. NAV gained 2.7% – outpacing the sector and causing valuation as of the close to drop to 70%. After-market it is trading close to 3% higher driving the valuation back to 72%. GAAP NII ($0.168) was a big increase from the previous quarter and well above the $0.12 dividend. They have refinanced their 5.5% notes with 4% notes which is a big tailwind for income as it’s more than a quarter of their overall debt and should push their overall debt cost towards 3.25% from 3.5%. Equity allocation (which is very large at 27% or so) has decreased a few percentage points and loan allocation increased which is a plus for additional income generation and is a step in the right direction of moving the portfolio back to a sensible BDC allocation. Net new investments were positive last quarter which is also good to see. Non-accruals remain at zero. Yield on debt investments is moving lower but that is offset by a total increase in income. Remains pretty attractive here though clearly there are legacy energy issues in the portfolio (which were converted into equity – hence the unusually large equity allocation). RAM Energy is 12% of the NAV (marked at 50% of cost) though the discount more than compensates for the holding.
I got a question from a subscriber of how to view BDC NII numbers – just go to the View-Single tab in the BDC Tool and put in the ticker you want to see and the summary of key metrics will pop up.
There was a question on the chat about which PIMCO taxable CEFs I favoured. I continue to like PDO here – it’s the only PIMCO fund in the Portfolios. The low premium, term structure (provides an anchor to the discount) and lack of distribution vulnerability (due to low distribution rate). Keep in mind the fact that it has a lower distribution rate than funds like PCI and PDI doesn’t mean it’s earning less – it’s earning on par or more (due to elevated leverage).
It was a pretty weak day in the income space as the 30-year high CPI print pushed both stocks and Treasuries lower. Among other drivers, house prices are feeding into the CPI (shelter is a third of the index) and because it’s sticky it is unlikely that inflation will go down very quickly. At the same time, despite the “highest inflation in 30 years” headlines, core YOY CPI you is barely above where it was in June. Maybe that’s why even though the 10Y yield jumped 0.10% it remains below its level from a week ago and about 0.2% below its level earlier in the year.
Higher quality / longer-duration preferreds sectors were hit with Banks, Fins and Insurance falling 0.6-0.8%. Some of the smaller sectors like Tech (due to lots of convertibles) and Telecom (mostly from a 5% drop in COMSovereign) fell hard too. In the CEF space, tax-exempt NAVs barely moved but discounts widened around 0.5% on average. Taxable muni sector NAV fell 0.8% – not unexpected given its longest duration profile in the CEF space. In the term CEF space, the Nuveen EM Debt CEF JEMD is now trading at a 2.6% discount which provides a nice potential upside into the likely termination about a year from now. Discount control and barely any duration are also positives. Average return of the pinned-to-par securities (Watchlist tab – Strategic Allocation Tool) was +0.02% and the median was -0.07%.
Three Delaware muni CEFs are merging – VCF, VMM into VFL. All are trading at mid-to-high single digit discounts which is likely due to the lack of Delaware / Macquarie brand name cachet. VFL 5Y total NAV returns have matched the sector (and slightly beaten on a 3Y basis). It had a significantly lower duration than the sector last time I checked with a primarily Investment-grade focus. Traded volume is very low so legging into this fund is always hard. VFL is trading cheaper to the other two funds so it might get a small discount boost post-merger. Current yield is on the low side at 3.88% but coverage looks to be above average around 103%.
The CLO Equity CEF OCCI Series A (OCCIP) will be redeemed. This one was outstanding for a while – puzzling since OCCI was able to issue OCCIO well below the OCCIP coupon. OCCIO is not super exciting at a 4.96% YTC and 5.71% YTM though, unusually for the sector, OCCI has not debt in the capital structure which makes its preferreds first in line to get repaid. The relatively short 2026 maturity is also a plus in this environment.
BDC PhenixFin (ex-Medley Capital) is issuing $50-57.5m of 5.25% 2028 Notes (PFXNZ) to refinance the $77m of 6.125% 2023 Notes (PFXNL). The company has about $50m of cash so it could use a part of that stash to redeem the stub of the 2023 notes or a part could remain outstanding. At par PFXNZ will be the highest-yielding BDC baby bond outside of the Great Elm Capital bonds. As of Q2 asset coverage was north of 300% which was the highest number in the entire BDC space. Cash made up $52m or about 20% of total assets. Leverage was about 0.5x – super low. 73% of investments were first-lien. To give a more intuitive perspective here, the company’s assets have to fall below 13% for the bonds not to pay off in full i.e. you take $77m of bonds then subtract $53m of cash on the balance sheet and divide by total remaining assets of $184m ($236m total assets less $53m cash). The company, unusually, has no secured debt ahead of the unsecured bonds. Obviously, this could all change but the bonds seem pretty attractive here. NAV has been rising the last few quarters as the company is conserving cash by not paying dividends. Non-accruals were fairly high at 7.5% on a fair-value basis. A total of 8.7% of investments are in the bottom two grades i.e. where some loss is expected. All-in-all you could do a lot worse at a 5.25% yield.
SPNT-B did its usual drop – now trading at a 5.14% yield which is at the higher end of its historic range. It looks very attractive both from a yield / quality perspective, being just one notch below investment-grade as well as a duration perspective. There are three elements which limit its duration. First, its very high coupon mathematically limits how much duration it has (the higher the coupon of a perpetual security the lower its duration, all else equal). Secondly, the fact that its high coupon is way above its yield means it is very likely to be redeemed in 2026 – making it a quasi-maturity security. And third, its CMT reset rate of 5Y Treasury yield + 7.298% (equivalent to a yield of 7.54% at the current price and 5Y Treasury yield) gives investors more than adequate protection in case of further rate rises.
There is a section in the Watchlist tab of the Strategic Allocation Tool for a bunch of other CMT preferreds that are worth a look for people worried about getting stuck with either fixed-rate preferreds or Libor fix-to-float (in case the Fed remains stubborn in raising rates – not a crazy idea if Brainard becomes the next chair).
With the increase for NMZ the fund now has a higher current yield than NMCO. I don’t think this should be taken as a sign that NMZ has a higher portfolio yield since NMZ has a much higher quality portfolio (45% IG versus 20% IG for NMCO) and lower leverage. NMCO does have a higher fee but it’s a smaller driver here. Unless NMZ has seen significant portfolio turnover recently, we should see its coverage fall below 100% and UNII deteriorate. The trend in coverage and UNII has both been stronger for NMCO so, in addition to the portfolio profile, it remains my preferred pick in the high-yield tax-exempt space.
Ivy High Income Opportunities Fund – a High-Yield CEF (IVH) cut its distribution to $0.08 (~6%) which looks to be below what it earned for the six months from Mar to Sep of 2020 suggesting it shouldn’t need to do more cutting. The fund’s longer-term returns are one of the highest in the sector which owes in part to its lower-quality profile. The valuation looks to be attractive as well (chart on chat). There might be some more price weakness when the cut shows up on CEFConnect in the coming week or so. The fund is going to be managed by Delaware / Macquarie going forward, most likely so hard to know if the performance will continue.
PHK has been on fire – best-performing NAV over the last month in the PIMCO taxable fixed-income suite ex-PGP and the best price performance. The fund’s premium is now only below that of PCM, PTY and PCN. Not clear why people are in love with the fund all of a sudden – it’s been pretty much the only PIMCO CEF in the High Income Portfolio since inception in Aug-2020 – there is a chart on the chat which shows the fund’s price performance is only barely below that of PGP (which is an equity/credit hybrid fund so not really apples-to-apples) since the inception of the High Income Portfolio where it has been the only PIMCO CEF (with the exception of PKO which made a short appearance as well). It’s getting a bit uncomfortable holding it at this premium. Within CEFs, it’s tempting to reallocate to NCV or ARDC and in preferreds to QRTEP or XFLT-A when it starts trading.
The Archegos blow-up is owed in some part to the equity total return swap product which is a synthetic way to hold equity exposure (fund pays balance sheet costs and fees to its bank counterparty, say, Libor + 50 and receives the exact payoff of the underlying stock). Equity TRS’s are not hugely common in the fund space. ETN’s feature them like the MLP-focused AMJ where they just replicate the underlying index. Some PIMCO funds use them as well, particularly, PGP which holds various equity index TRS on top of a portfolio of credit assets. The product is very attractive because 1) it’s cheap as it’s passive and 2) it doesn’t take up a lot of footprint, being a derivative rather than a physical asset i.e. the market value is close to zero which ensures that PGP investors don’t freak out as they probably would if they knew the actual leverage profile of the fund. There is nothing nefarious in the use of equity TRS by funds as everything is disclosed – the main issue for Archegos counterparties, arguably, was that each one didn’t know the extent of the exposure the fund already had to the stocks as it didn’t have to report its trades.
Three Invesco credit CEFs VVR, VLT and VTA have approved level managed distribution plans. I mentioned tilting to CEFs with MDPs in a recent article so these can be added to the list for investors who absolutely hate cuts. Obviously, cuts can also offer opportunity. A cut is often followed by a widening in the discount which allows investors to acquire the same set of assets at an improved valuation and receive a higher underlying yield due to the wider discount. In terms of total returns, I would also expect funds with recent cuts to outperform, much like fallen angels do in the high-yield sector though this isn’t something I have quantified.
Interestingly, there seems to be some disagreement about the outlook for the CEF market in the commentariat. I usually play the role of Eeyore in these sorts of arguments so maybe worth a quick recap. BlackRock puts out historic comparisons of CEF vs OEF performance and other commentators have noted that the big performance advantage of CEFs in some sectors over OEFs make CEFs a slam dunk in comparison. While it’s true, of course, that CEFs can deliver superior performance over OEFs it’s useful to understand why they have done so historically. The key driver of CEF versus OEF outperformance in fixed-income sector over the last decade or so has had to do with two things 1) the historic downtrend in rates that provided a return tailwind to assets and 2) higher underlying yields than we have at the moment. Because CEFs tend to be leveraged vehicles, these tailwinds have allowed them to outperform unleveraged OEFs. Unfortunately, this time is indeed different. Underlying yields are much lower now than they were in the past and the historic downtrend in rates is unlikely to be repeated unless we see strongly negative rates. And while it’s true that leverage costs are low they don’t make up for these two key trends. As I’ve discussed before, at this point CEFs with decent quality holdings – a 30% leveraged CEF holding the BB-rated corporate index (highest high-yield credit rating) with a 0.8% fee on total assets is adding zero additional yield on top of its portfolio yield (3.57% BB yield ends up 3.53%). Little yield dispersion and an early cycle environment suggest that the tailwind from alpha is going to be harder going and in any case there are a number of actively managed credit ETFs with much lower fees than CEFs. And the combination of relatively tight discounts and low underlying yields also mean that the additional yield enjoyed by investors is that much smaller. Finally, while underlying yields have moved lower, fees have remained the same and so are taking an increasing share of the yield generated by CEFs. So, overall, this doesn’t seem to be the perfect environment for CEFs.
10y Treasury yields are at a post-COVID high, delivering a pretty sizable 6bp move on Monday. The fact that stocks closed flat (SPY was down 0.05%) given the continuing fall-out from Archegos and Treasury yield are at the highest level since Jan of last year suggests one of two things. Either the broadbased macro recovery is simply too strong to worry about Treasury yields and idiosyncratic deleveraging stories or it’s a Wile E. Coyote moment. Occam’s razor suggests we should keep an eye on the broader cyclical picture and as that is likely to be the key driver of asset performance.
ECCW – the new Eagle Point Credit Co (ECC) baby bond started trading. Looks like it swooned first thing – similar to the action in OXLCL which is now trading back at par. Big picture, it is the most attractive senior security in the ECC capital structure – highest yield at 6.83% (on a YTW basis) with longer call protection. Overall, however, OXLCL still looks best due to its lower proportion in the capital structure (at the expense of more preferreds) which means that there will be more assets to divide among the OXLC bondholders than for ECC bondholders. Check out the recent article for more background.
In today’s article, I mentioned tilting to funds with managed distribution policies for investors who want to mitigate the risk of big distribution cuts in CEFs – you can track these in the Yield section of the Sector View tab of the CEF Tool. Any questions just shout.
DMO had a late day wobble with a price moving lower by about 2% while the NAV moved up 1% – discount was 3% wider on the day. At -4% it’s not a blinding bargain but with PIMCO CEFs at double-digits, it’s tempting. Two things worth keeping in mind though – DMO longer-term performance is not great – about half of the PIMCO CEFs on a 5-year CAGR NAV basis. However, if PIMCO CEFs do cut then their premiums will likely move lower so even if DMO has worse alpha it might still outperform. So, much depends on what PIMCO do with their distributions.
OCCI has priced its offering at $14.67 – well below its recent high of $16.90 (adjusted for the $0.53 divvy) in mid-March and about 6% lower than where it was used to rotate into AAIC-C. Net net the rotation is up 10%, distribution-adjusted – roughly half due to the drop in OCCI and half due to the rise in AAIC-C. We might get a pop in OCCI like we did in PDI when it did its offering below the market.
Wells-Fargo CEF distributions (EAD, ERC, ERH) should start to go up next month as March falls out of the 12-month lookback window. So, for example, EAD distribution should rise by about 5% over the coming months unless we see a very big move in the NAV. EAD saw 5k shares bought by an insider yesterday which could be a coincidence or not.
Rotation today in the Defensive Income Portfolio from the State Street preferred to Schwab – SCHWL. Both are financials though with pretty resilient business models, State Street being a boring large custodian of assets and Schwab being a brokerage. Schwab’s EPS was flat from Q4-19 to Q1-20 so it’s relatively anti-cyclical.
AAIC-C looks like it caught a bid finally, rising 1.5%. This has been the highest conviction pick in the mREIT preferred space. Investors are likely scared off because it is still not paying common dividends but that’s actually good for the preferred. Separately, 6.8x coverage is very high for its combination of 3x leverage and 90% agency portfolio. Other mREITs with a similar 90% agency allocation have leverage at much higher levels and coverage at lower levels. Separately, the AAIC-C yield is north of 9% which is the highest in the sector – even all MITT preferreds are now sub-9% and their coverage is just 1.7x with a 50% agency portfolio. The relative valuation is less ludicrous than it was a few weeks ago as AAIC-C has rallied but it’s still not where it should be.
With senior securities rallying strongly here, it makes sense to start looking at issues that are currently callable as they can have some advantages. In particular, 1) these securities are trading at a higher yield than they “should” because the current callability is preventing the price from climbing higher above par and 2) being “pinned-to-par” they should be somewhat more (though not fully) resilient to higher rates since they have a yield cushion on which to fall back before the price starts falling.
For example, there are 4 Telephone & Data Systems bonds TDA, TDE, TDI and TDJ, BB/Ba2 rated, all of which are currently callable with all trading slightly above par. The highest coupons have the highest stripped yield but also the lowest YTC. TDJ with a 7% coupon has a -1.2% YTC. If any bond is redeemed it would be this one as it has the highest coupon so it’s not overly appealing. TDI, however, has the third lowest coupon and is less likely to be redeemed (TDS would have to redeem 3 bonds in one go – not impossible but unusual) but is offering a 6.67% stripped yield (about 0.25% lower than TDJ) and only a -0.4% YTC so even if it’s redeemed the immediate hit is a small write-off.
The 3 US Cellular bonds have a similar dynamic. Of the 2 currently callable bonds (UZA, UZB) both of which are trading at significantly higher stripped yields than the 2 non-callable bonds, UZA is the lower coupon one which gives it some breathing room as far as redemption. Its YTC is -1.2% so it’s not without risk but is attractive. Be careful with ex-div dates when putting in limit orders as the bond’s price will move lower by the quarterly dividend on that date which is coming up.
Latest OPP shareholder report shows that they have downsized the credit facility from 60m to 30m which is great for the preferred. OPP-A has been trading pretty weak, now at $23.53 clean price and a 4.65% yield and continues to be very attractive for an A1-rated stock. Normally, preferreds, unlike funds don’t give you a lot of diversification but this one does as it’s a fund preferred. A third of the fund is also in agency CMOs. Leverage is modest at around 30% for a CEF though it does hold credit CEFs as well which adds implicit leverage. To provide some intuition, the fund’s NAV fell around 25% during the COVID crash, however, it needs to fall more than 70% for the asset coverage of the preferreds to move below 1x.
EFF is going to liquidate with Eaton Vance throwing in the towel here. The EFF vote was previously adjourned to 19-Mar. EFT, EVY, EFR votes are still adjourned to 19-Mar. EFR is in the Tactical Ideas tab still – entry in early Jan was at 10.3% discount which is now 4.9%. The view was that the fund was trading then at a 1% tighter discount to the sector which was a good risk/reward i.e. roughly 1% downside if the advisory agreement is approved and the fund’s discount moves to the sector average and the upside was 10% in case of liquidation. With EFF liquidating here, we might see a discount tightening for EFR in sympathy here as people increase the probability of the other EV funds liquidating as well. EFR is still trading 1% tighter to the sector average so the risk/reward is still ok though in absolute terms the discount has already moved half-way towards zero so in absolute terms less interesting here.
OPP – which is another Tactical Ideas position is trading at a 2% discount which is in the initial target range. The fund may convert to an open-end fund on a shareholder vote this year. The entry was at a 5.6% discount so there is additional 2% upside here which is also less compelling in absolute terms. Seems like a theme.
The BlackStone loan CEFs BSL, BGX and BGB have cut distributions slightly by 1 or 2 cents or around 1-3%. The funds have what they call a “dynamic” distribution policy where they try to align distributions with net income. Some CEF investors spend a lot of time trying to find funds that won’t cut distributions – one strategy (which works best in a tax-sheltered account, admittedly) is to find decent funds that make quarterly distribution announcements. This way it’s relatively easy to sidestep possible cuts at the cost of some slippage. The three funds are trading at discounts wider than the sector average so we might not see much of a pullback. Plus, the distribution cuts are very small – much smaller than their previous cuts which does suggest that we’re probably around their sustainable income levels. A quick look at the last 6-month implied NII for BSL shows its income has exceeded the distribution so this might be a temporary bump unless there was an up-in-quality rotation by the fund or some refinancings which is entirely possible given loans are trading right around par.
Today’s article is about OXLCL – the new OXLC baby bond. There is no grey market for bonds so we may need to wait till the 16th to see where it trades. Most likely I will be replacing OXLCP with the bond despite the slightly lower yield. Historically, the market has not adjusted yields for the subordination of the preferreds in the capital structure i.e. OCCIP (not being subordinated by debt) has tended to trade at a similar or higher yield than the OXLC or ECC preferreds (all of which have tended to be subordinated with the exception of the last 9 months or so for OXLC). After the OXLCO call, ECCB is now the highest-coupon CLO Equity preferred with a 7.75% coupon and a 3.35% YTC. There is very little chance it doesn’t get called in 2021.
JPM priced a new preferred – JPMJL grey ticker at 4.55%. That looks very good to the other JPM series – the highest of which is trading close to 1% below that though a higher stripped yield. It is interesting that two currently callable JPM series feature very high coupons for the current environment of 6.1% (JPM-G) and 6.15% (JPM-H). Given JPM can now issue at 4.55% it’s weird they haven’t called these. A bank like JPM is not going to leave money on the table so there must be a non-economic reason for it not to have redeemed those two. Texac Capital Bancshares issued a new series TCBLL (B+ rated) trading at a 5.76% YTC versus -1% for the other currently callable series TCBIP.