I don’t normally talk about junk paper in this blog, but Prefblog’s Prettiest Assiduous Reader writes in and points out that there’s some really strange behaviour going on.<\/p>\n
NTL.PR.F closed today at 11.40-59, 10×7<\/p>\n
NTL.PR.G closed today at 10.00-48, 15×10<\/p>\n
These two issues constitute a “weak pair”, as defined in my article about Preferred Pairs<\/a>. They’re “ratchet rate” floaters, currently paying 100% of prime on their par value of $25.00 – which comes to $1.3125 at today’s prime of 5.25%<\/a>. In other words, an interest rate of over 11% on investment … although, mind you, you can only call it 11% if you actually get paid the money. DBRS<\/a> rates the Nortel Preferreds at Pfd-5(low), which is their lowest ranking short of default, and Nortel’s senior unsecured debt at B(low), which isn’t exactly investment grade either.<\/p>\n But regardless of where the level should be for these issues, why is there a difference?<\/p>\n NTL.PR.F had a conversion option to fixed rate in 2006<\/a>. NTL.PR.G\u00a0has been\u00a0mentioned\u00a0on\u00a0PrefBlog\u00a0in a post about distressed preferreds<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" I don’t normally talk about junk paper in this blog, but Prefblog’s Prettiest Assiduous Reader writes in and points out that there’s some really strange behaviour going on. NTL.PR.F closed today at 11.40-59, 10×7 NTL.PR.G …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-1903","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1903","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1903"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/1903\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1903"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1903"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1903"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}