CIT has amended its restructuring plan:
The amended terms of the restructuring plan include, among others:
- A comprehensive cash sweep mechanism to accelerate the repayment of the new notes;
- The shortening of maturities by six months for all new notes and junior credit facilities;
- An increased amount of equity offered to subordinated debt holders reflecting agreements with holders of the majority of its senior and subordinated debt;
- The inclusion of the notes maturing after 2018 that had previously not been solicited as part of the exchange offer or plan of reorganization;
- An increase in the coupon on Series B Notes, to 9% from 7%, being issued by CIT Delaware Funding; and
- Provided preferred stock holders contingent value rights in the plan of reorganization, and modified the allocation of common stock in the recapitalization after the exchange offers, as part of an agreement with the United States Department of Treasury.
CreditSights has condemned the amendments to the CIT restructuring:
CIT “has done very little to meaningfully enhance the offer” to the majority of senior unsecured bondholders of the holding company, said Adam Steer, an analyst at CreditSights Inc. in New York.
Under the revised terms, maturities on new notes issued in exchange for existing bonds will be shortened by six months, CIT said Oct. 16. The New York-based company will also boost the amount of equity offered to subordinated debt holders and include notes due after 2018 that previously weren’t part of the exchange offer or reorganization plan that was announced Oct. 1.
…
CreditSights continues to question why holders of longer- dated senior unsecured bonds would prefer the exchange over the prepackaged bankruptcy offer, Steer said.
And Carl Icahn says he can give the company a better deal:
Billionaire investor Carl Icahn offered CIT Group Inc. a $6 billion loan as an alternative to what he called an “incompetent and unconscionable” proposal by the board of directors to avert collapse.
Icahn, who said he is CIT’s largest creditor, offered to underwrite a loan to the New York-based company that he said would save as much as $150 million in fees compared with the bank’s proposed financing.
…
Bondholders should reject any offer less than 90 cents on the dollar, according to analysts at Egan-Jones Ratings Co. in Haverford, Pennsylvania.“Forget Icahn, forget the exchange,” the analysts said in a report today. “Neither Icahn’s offer nor the revised exchange (which reduces maturities by six months) provides the best value to creditors.”
“Icahn’s letter is in line with our view that the best way of maintaining value is by running off CIT’s book and gracefully winding down the portfolio over time,” said Adam Steer, an analyst at CreditSights Inc. in New York. “The proposed change or prepack plan does not leave the company with a lot of hope for running the company viably.”
Same old same old for the preferred share market today, as PerpetualDiscounts lost 22bp while FixedResets gained 5bp. Volume was off a bit, but still entirely respectable; almost all FixedResets.
HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.5598 % | 1,465.5 |
FixedFloater | 5.95 % | 4.09 % | 45,636 | 18.74 | 1 | -2.9708 % | 2,620.3 |
Floater | 2.66 % | 3.09 % | 101,497 | 19.50 | 3 | -0.5598 % | 1,830.8 |
OpRet | 4.90 % | -3.39 % | 115,618 | 0.09 | 15 | 0.1236 % | 2,280.3 |
SplitShare | 6.41 % | 6.50 % | 562,270 | 3.96 | 2 | 0.0221 % | 2,062.1 |
Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1236 % | 2,085.1 |
Perpetual-Premium | 5.94 % | 5.98 % | 143,555 | 13.85 | 11 | -0.0148 % | 1,841.6 |
Perpetual-Discount | 5.97 % | 6.03 % | 219,987 | 13.84 | 63 | -0.2207 % | 1,735.2 |
FixedReset | 5.52 % | 4.24 % | 462,482 | 4.03 | 41 | 0.0537 % | 2,105.9 |
Performance Highlights | |||
Issue | Index | Change | Notes |
BAM.PR.G | FixedFloater | -2.97 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 25.00 Evaluated at bid price : 18.29 Bid-YTW : 4.09 % |
ELF.PR.F | Perpetual-Discount | -2.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 19.46 Evaluated at bid price : 19.46 Bid-YTW : 6.87 % |
BAM.PR.N | Perpetual-Discount | -2.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 17.57 Evaluated at bid price : 17.57 Bid-YTW : 6.84 % |
TRI.PR.B | Floater | -1.77 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 18.86 Evaluated at bid price : 18.86 Bid-YTW : 2.10 % |
HSB.PR.D | Perpetual-Discount | -1.74 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 21.43 Evaluated at bid price : 21.43 Bid-YTW : 5.90 % |
W.PR.H | Perpetual-Discount | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 22.37 Evaluated at bid price : 22.95 Bid-YTW : 6.01 % |
BNS.PR.N | Perpetual-Discount | -1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 22.48 Evaluated at bid price : 22.61 Bid-YTW : 5.83 % |
ELF.PR.G | Perpetual-Discount | -1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 17.21 Evaluated at bid price : 17.21 Bid-YTW : 6.96 % |
GWO.PR.H | Perpetual-Discount | -1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 19.78 Evaluated at bid price : 19.78 Bid-YTW : 6.20 % |
TD.PR.S | FixedReset | -1.09 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2018-08-30 Maturity Price : 25.00 Evaluated at bid price : 25.47 Bid-YTW : 4.37 % |
SLF.PR.D | Perpetual-Discount | -1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 18.27 Evaluated at bid price : 18.27 Bid-YTW : 6.16 % |
RY.PR.B | Perpetual-Discount | -1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 20.64 Evaluated at bid price : 20.64 Bid-YTW : 5.79 % |
IAG.PR.A | Perpetual-Discount | 1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 18.75 Evaluated at bid price : 18.75 Bid-YTW : 6.20 % |
IAG.PR.E | Perpetual-Discount | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 23.92 Evaluated at bid price : 24.10 Bid-YTW : 6.27 % |
MFC.PR.A | OpRet | 1.16 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2015-12-18 Maturity Price : 25.00 Evaluated at bid price : 26.12 Bid-YTW : 3.37 % |
BMO.PR.H | Perpetual-Discount | 1.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 22.70 Evaluated at bid price : 23.55 Bid-YTW : 5.68 % |
Volume Highlights | |||
Issue | Index | Shares Traded |
Notes |
GWO.PR.I | Perpetual-Discount | 57,985 | Nesbitt crossed 50,000 at 18.55. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-10-19 Maturity Price : 18.60 Evaluated at bid price : 18.60 Bid-YTW : 6.12 % |
RY.PR.L | FixedReset | 54,075 | RBC crossed 25,000 at 26.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-26 Maturity Price : 25.00 Evaluated at bid price : 26.51 Bid-YTW : 4.32 % |
TD.PR.G | FixedReset | 53,999 | RBC crossed 32,000 at 27.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-30 Maturity Price : 25.00 Evaluated at bid price : 27.14 Bid-YTW : 4.22 % |
MFC.PR.D | FixedReset | 48,719 | Nesbitt crossed 30,000 at 27.80. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-19 Maturity Price : 25.00 Evaluated at bid price : 27.85 Bid-YTW : 4.13 % |
TRP.PR.A | FixedReset | 37,058 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2015-01-30 Maturity Price : 25.00 Evaluated at bid price : 25.21 Bid-YTW : 4.50 % |
BNS.PR.X | FixedReset | 36,600 | RBC crossed 20,000 at 27.60. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 27.55 Bid-YTW : 3.85 % |
There were 32 other index-included issues trading in excess of 10,000 shares. |
Gotta love the debacle in fixed reset new issue YPG.PR.C — trading as low as $22.50 today — to yield more as the potential perpetual it is than the yield to redemption of YPG.PR.A. The pendulum swing from initial overvaluation of Pref C (flagged on Prefblog) to undervaluation is going nicely!
My arbitrage trade long YPG.PR.B and short PR.C was quickly profitable and has now been switched to short PR.A (yield to redemption 10.6 for PR.B vs 7.2% for PR.A — equates to $3.00 undervalued for PR.B.
Obviously more retail investors should be listening to Prefblog than their brokers when it comes to Pref IPOs.
Well done James.
It might have had something to do with a G&M article sent to me by Assiduous Reader JB: Debt-laden Yellow Pages searches for growth.
If we figure that the recent FixedResets were bought largely – but not entirely, of course – by unsophisticated investors, then it makes sense that the headline risk that is the curse of the lower quality credits would hammer YPG.PR.C more than other instruments.
Frankly, I don’t remember commenting publicly on the valuation of YPG.PR.C – all I can say is, the fund holds YPG.PR.B and didn’t swap!
Congratulations on your arbitrage, prefhound!