{"id":1786,"date":"2008-02-06T17:22:30","date_gmt":"2008-02-06T21:22:30","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=1786"},"modified":"2008-02-06T17:22:30","modified_gmt":"2008-02-06T21:22:30","slug":"epppra-and-wnpre-coupled-decoupled","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=1786","title":{"rendered":"EPP.PR.A and WN.PR.E : Coupled? Decoupled?"},"content":{"rendered":"

Assiduous Reader madequota<\/em> asked about EPP.PR.A in the comments to February 5<\/a> … since he is\u00a0an Assiduous Writer<\/em> as well … let’s indulge him, shall we? It has been a long time since I last looked at this issue<\/a>.<\/p>\n

EPP.PR.A\u00a0was issued last spring and received an extremely hostile reception<\/a> from the market, as by the time it commenced trading the market was way down. It is my understanding that the underwriters had a really hard time selling it and took a bath. Problems with such issues can persist for a long, long time, especially in the preferred market: many preferred share investors buy an issue when issued and never look at it again. Those issues that have trouble finding such a “real money” home at issue time find themselves perpetually in the hands of hot money.<\/p>\n

Anyway … this is another split-rated issue, as is the CCS.PR.C examined yesterday<\/a>; it’s rated Pfd-3(high) by DBRS and P-2(low) by S&P.<\/p>\n

I’m not going to say much one way or the other. Issues with this kind of credit carry a larger proportion than usual of specific risk – and my firm<\/a> avoids this for the most part. I don’t want to analyze companies! I analyze the yield curve! This means I concentrate on high quality instruments in which specific risk is minimized.<\/p>\n

However, I’ve prepared some graphs that may provide some context for those who want to analyze the company’s financials and, at least to some extent, take\u00a0a view on the credit:<\/p>\n