USB - Series H preferred

[ValueMaven]

$25 par-value preferred trading at @21.80, w/YTM over 5% at this point, with a nice discount to its par-value (17% below its $25 par value).  Preferreds are getting smoked b/c of rates, but it's USB.  It's an interesting idea at this point...

 

 

[thepupil]

I see CUSIP 902973791 Pfd trading @ $24.54, $98.16, yielding 5.28%.  Which CUSIP is @ $87?

 

Bloomberg labels the one I'm looking at as the H series in one place and O series in another.

 

I generally don't like the negative convexity of preferreds near par, unless they're really paying out some hefty coupon. The ones that I'm looking at yield 212 bps over the 30 yr, but only have ~ 2 points of upside from duration / tightening.

 

A similarly yielding pref w/ a lower coupon / dollar price would have less negative convexity, but I don't see the issue @ $87.

 

For now I'd prefer the BoA and WFC preferreds which have some call protection, and higher yields (~5.9%). They're covered well here. Those offer higher yields and much better convexity; the difference in credit risk is academic in all but a serious financial collapse.

http://www.philosophicaleconomics.com/2017/03/a-value-opportunity-in-preferred-stocks/

 

[NoCalledStrikes]

Why would USB ever call this one when it eventually floats at 3 month Libor +.6?  I don't see how you ever get $25 for it. I think this is a de facto perpetual.

[thepupil]

I know see the correct series. ~$87 for greater of 4.1% or 3mL+60. Interesting. Need to think about how to think about pricing that.

[Grossbaum]

Looks like there is a GS preferred that is similar.

 

GS C

Series C

$22.42 price

Current Yield: 4.44%

 

$25.00 Par

4.0% Floor

3mo LIBOR +75bps

CUSIP 38144X609