A Floating Rate Preferred With Value

Next Tuesday, Brookfield Asset Management Inc. will receive the proceeds of its latest offering of preferred shares, a $200-million issue that pays 4.85% a year. And in early December Innergex Renewable Energy Inc. will receive $50-million from a similar structured offering that pays holders 5.75%.

One week back, the U.S. Treasury Department announced it would start auctioning off two-year floating rate notes – either later this year or early next year. The news marked the first new financing product from the U.S. government in more than 15 years since TIPS or Treasury Inflation-Protected Securities were introduced in 1997.

Michael Johnston submits:Continuing a recent trend on the fixed income side of the ETF arena, iShares announced the launch of an ETF that offers exposure to floating rate debt. The new Floating Rate Note Fund (FLOT) will seek to replicate the Barclays Capital U.S.

By Valuematters:In the continuing search for yield, individuals are well served to consider preferred stocks. I recently wrote an article about some variable rate preferred securities, but the focus of this article is fixed/floating preferred shares. In general, these work as two stage securities where the first stage is a fixed yield (fixed as it relates to par value) for a certain number of years.

Michael Johnston submits:Van Eck is best known in the ETF world for its suite of funds focusing on equities of hard asset producers and emerging markets. But the latest offering from the New York-based issuer targets a corner of the fixed income market that has historically not been readily accessible through exchange-traded products.

By iShares ETFs: With investors continuing to look for ways to hedge against potentially rising interest rates, we’ve been getting a lot of client questions about floating rate notes (FRNs), and have been seeing increased interest in the iShares Floating Rate Note ETF (FLOT). Since the beginning of the year FLOT has doubled in size, gathering $392mm in new inflows and bringing the total AUM to $789mm as of 3/1/2013.

By Randy Durig:Most fixed income investors are well aware of the greatly increased difficulty of finding and acquiring yields that are high enough to provide the cash flow they need or desire without being accompanied by very significant and unacceptable risks, either in loss of principal or in long term wealth losses related to inflation. Consequently, we look under the hood of hundreds of companies to find the hidden gems that satisfies our client demand for both high yields and acceptable risk.

The Series 18 preferred shares issued by Bank of Nova Scotia five years back will live on. The shares are noteworthy because they were the first of the perpetual rate reset pref shares issued by the banks in the modern era. Since then most of the banks followed suit – as have a number of other financial institutions as well as industrial issuers. In all about $20-billion was raised. The shares were innovative for two reasons: • They counted as permanent or Tier 1 capital;