Description
The recent banking crisis created significant dislocation in preferred and capital securities —hybrid securities that have features of both stocks and bonds. With the crisis now contained bank sector risks are diminished.
However, the perceived risk premium for preferred and capital securities continues to represent relative historical value and attractive yields with potential for greater upside when the bonds are purchased at discounts to par value.
Learning Objectives
As a result of attending this session, advisors will:
• Historical recovery periods following market corrections and the end of rate-hiking cycles
• The evolution of preferred structures including traditional preferred stock and hybrid bonds
• Preferred markets including Retail $25 par value fixed rate securities, Capital securities or Institutional $1000 par Preferreds, and Additional Tier 1 Contingent Convertibles (Cocos) “bail-in” debt instruments
• Unique coupon structures such as Fixed for life, Floating rate, Fixed-to-variable, and Fixed-to-floating
• Favorable tax treatment of qualified dividend income (QDI)