Bank Of America: Panhandling Again
Shhh!!! Don't Ask, Don't Tell... Bank Of America, the #2 US bank by assets...
Jan. 22nd said its Q4 earnings dropped 95% after $5.28 billion of mortgage-related writedowns and higher provisions for future loan losses.
2 days later...January 24th: sold $6 billion of perpetual preferred shares at a yield of 8%.
The junior subordinated debt pays a fixed rate until 2018. If not called, they will float 363 basis points above three-month Libor.
The bank also sold $6 billion of convertible preferred stock which yield 7.25%, and carry a conversion price of $50 per common share.
April 21st the bank reported a 77% drop in Q1 net income... three days later...
April 24th: B of A sold $4 billion of perpetual hybrid bonds with an 8.125% coupon.
The subordinated bonds pay a fixed rate until 2018, when, if not called, they will float at 364 basis points above the three-month LIBOR.
Five days later... April 29th: B of A sold another $6 billion of hybrid bonds in the offering.
Yesterday... B of A sold another $2.7 billion of perpetual preferred stock.
The non-cumulative securities yield 8.20% and are non-callable for five years.
The yield on today's debt is 7.5 basis points higher than paid on the April sale and 20 basis points higher than the January sale.
So, five years of 8% to 8.20% yield payments on $10.7 billion, then...
Libor is currently set at 2.66%, add 365 basis points and the yield will be at 6.31% ASSUMING no Libor increases in the next five years.
Shhh!!! don't mention the 7.25% yield on $9.7 billion in preferred stock, redeemable at $50 per share with current share price at $34.73...
Yesterday's sale takes Bank of America's capital raisings to $19.7 billion this year, each with rising risk premiums, makes one wonder, does'nt it?
Hattip to Bloomberg.
Jan. 22nd said its Q4 earnings dropped 95% after $5.28 billion of mortgage-related writedowns and higher provisions for future loan losses.
2 days later...January 24th: sold $6 billion of perpetual preferred shares at a yield of 8%.
The junior subordinated debt pays a fixed rate until 2018. If not called, they will float 363 basis points above three-month Libor.
The bank also sold $6 billion of convertible preferred stock which yield 7.25%, and carry a conversion price of $50 per common share.
April 21st the bank reported a 77% drop in Q1 net income... three days later...
April 24th: B of A sold $4 billion of perpetual hybrid bonds with an 8.125% coupon.
The subordinated bonds pay a fixed rate until 2018, when, if not called, they will float at 364 basis points above the three-month LIBOR.
Five days later... April 29th: B of A sold another $6 billion of hybrid bonds in the offering.
Yesterday... B of A sold another $2.7 billion of perpetual preferred stock.
The non-cumulative securities yield 8.20% and are non-callable for five years.
The yield on today's debt is 7.5 basis points higher than paid on the April sale and 20 basis points higher than the January sale.
So, five years of 8% to 8.20% yield payments on $10.7 billion, then...
Libor is currently set at 2.66%, add 365 basis points and the yield will be at 6.31% ASSUMING no Libor increases in the next five years.
Shhh!!! don't mention the 7.25% yield on $9.7 billion in preferred stock, redeemable at $50 per share with current share price at $34.73...
Yesterday's sale takes Bank of America's capital raisings to $19.7 billion this year, each with rising risk premiums, makes one wonder, does'nt it?
Hattip to Bloomberg.
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