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That is exactly what happened recently with trust preferred issues from JPMorgan and Citigroup.
Also, in 1996 banks were allowed to count preferred issues as part of their statutory capital, which defines how much they can lend.
There are 15 different GM preferred issues that I like, such as the General Motors (19, HGM) issue, a 7.375% senior note due Oct. 1, 2051; these preferreds yield 9.75%.
With the exception of the JP Morgan preferred stock that at least trades 100,000 shares or more daily, few preferred issues trade more than 20,000 shares.
If a company goes bankrupt, its preferred issues could become virtually worthless.
Most new preferred issues carry five years of protection against call.
Similar(30)
In the second episode, he explained why he preferred issuing executive orders: "I get to make people do whatever I want".
One area of opportunity that the company seems to have overlooked is in addressing its $345 million 6.5% convertible trust preferred issue.
GM will use proceeds from its $4 billion plus preferred stock issue to redeem the Treasurys 9 percent preferred issue as well as make a $4 billion equity contribution to its pension plans, both plus factors.
I am recommending that my subscribers hold on to this trust preferred issue, but be prepared for a roller-coaster ride in pricing.
They have a preferred issue, Mirant Trust I (nyse: MIR.A), that's yielding in the17% to 18% range plus it's convertible.
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