The below came up in a screen I ran on Fidelity’s “preferred stock” screener. Criteria were S&P rated investment grade AND Moody’s rated investment grade, Callable Yes, Price < $25.50, coupon >4%.
5 stocks, one of them with the symbol KTBA. (emoji for eyebrow raise here). Something called “Structured Products Corp., 7.00% CorTS (Corporate-Backed Trust Securities) Certificates, principal amount $25 per certificate, issued by CorTS Trust for BellSouth Debentures, the Trust.” …“Structured Products Corp. is an indirect, wholly-owned subsidiary of Salomon Smith Barney Holdings, a member of Citigroup (NYSE: C).”
A little digging mostly through QuantumOnline appears to reveal this is an old preferred issued by original At&t BellSouth in the late nineties/early aughts before it got swallowed up and de-listed.
non-callable, non-cumulative, non-anything but supposed to pay dividends semi-annually until… 2095???
Traded OTC and classified as “microcap”. I guess!
Anyone seen one of these? “Investment grade” must have come from the original ratings 20 years ago?
FC
1 Like
'Circus,
According to Quantum Online, as of 03/04/22 KTBA is rated WR/NF, meaning, either the issuer stopped paying to be rated or the agencies have backed away, because the security doesn’t merit attention. Yahoo Finance says avg vol is 760, and there’s no bid/ask, meaning, “a fair price” is anyone’s guess. Schwab isn’t quoting it. But TD shows a trade yesterday at 22.25. So, let’s assume KTBA could be bought at that price, making the CY 7.9%, which is attractive. But is it attractive enough for the risks that have to be accepted, namely, owing an obscure, very long-dated, all but unmarketable security?
Arindam
A trust preferred is essentially a bond traded as a stock. The dividend is funded by a single bond held by a financial firm. They were very popular about 20 yr ago but most have been called as companies could refinance at lower interest rates.
Most were callable at $25/share. A non-callable one with a long maturity date is unique.
Read the prospectus to be sure you know the details. And look into the bond issuer. Financial stability. Still listed in their liabilities. Or transferred to someone else over the years?
1 Like