I have been looking into Preferred Debt and spotted two different companies in the NG exploration and pipeline distribution business that have discounted debt on sale.
The first is LEHMAN ABS 7.875 DUK - symbol JBI ( finance.yahoo.com ) issued by Duke Energy prior to the spin off of SE. Spectra Energy Capital, LLC is a wholly-owned subsidiary of Spectra Energy Corp and the successor to Duke Capital LLC, successor to Duke Capital Corporation. The certificates pay 7.875% per annum distributions semiannually on 2/15 & 8/15 to holders of record one day prior to the payment date. This debit is now Spectra Energy Capital LLC liability and yields around 9% at the current price of $21.75. The upside is $25 which is the callable coupon which would yield a 22% return if called. The low on this was $16 in October 2008. Moodys rating Baa1 / S&P rating BBB as of 1/25/09 . I think any price below $20 might be a good entry point.
The Second is MDU Resources Group Inc., 4.70% Series Preferred Stock, liquidation preference $100 per share, redeemable any time at the company's option at $102.00 plus accrued and unpaid dividends, not subject to mandatory redemption, distributions of 4.70% ($4.70) per annum are paid quarterly on 1/1, 4/1, 7/1 & 10/1. It is rated Baa2 by Moodys and BB- by S&P. The last trade was $65.82 which yields 7.2 % but is thinly traded ( pinksheets.com ).
This previously traded around $63 in June 2004 and sold at a high of $88 in June 2007. An entry point at $60 or lower would lock in a good yield and have the potential of a 45% gain if the preferred tested its previous high of $88.
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Many of these preferreds are thinly traded so pick your entry point and wait for your fill. There are a lot of hidden "value" opportunities that I believe the market has under priced especially if you buy from a quality operating company.
Many more hidden gems can be found in this database. Good "value" hunting.
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