Beginning on July 11, 2012, and for the 90 days that follow, preferred stock investors are going to see a significant uptick in their brokerage cash account thanks to a Thursday, June 7, 2012 announcement by the Federal Reserve.
The June 7 Fed announcement opened the "premature call window" for 90 days, triggering a multitude of trust preferred stock (TRUPS) redemptions from our publicly traded banks. With the premature call window now open (for the second time since July 2010), all bank-issued TRUPS are now redeemable regardless of the call date that is published in their prospectus.
Companies are required to provide a minimum of 30 days notice when they redeem ("call") a preferred stock. SunTrust was the first to react on Monday, June 11, redeeming its STI-Z TRUPS for July 11, 2012. If you own shares of STI-Z, SunTrust is going to buy your shares back from you on that date, the proceeds showing up in your brokerage cash account.
Citi and JP Morgan were quick to act as well with TRUPS redemptions. Citi is redeeming just under $5 billion of their TRUPS while JP Morgan is calling $9 billion worth.
The following day KeyCorp...
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The June 7 Fed announcement opened the "premature call window" for 90 days, triggering a multitude of trust preferred stock (TRUPS) redemptions from our publicly traded banks. With the premature call window now open (for the second time since July 2010), all bank-issued TRUPS are now redeemable regardless of the call date that is published in their prospectus.
Companies are required to provide a minimum of 30 days notice when they redeem ("call") a preferred stock. SunTrust was the first to react on Monday, June 11, redeeming its STI-Z TRUPS for July 11, 2012. If you own shares of STI-Z, SunTrust is going to buy your shares back from you on that date, the proceeds showing up in your brokerage cash account.
Citi and JP Morgan were quick to act as well with TRUPS redemptions. Citi is redeeming just under $5 billion of their TRUPS while JP Morgan is calling $9 billion worth.
The following day KeyCorp...
Note To Readers: This article was chosen to appear on the popular investing website 'Seeking Alpha'.
By clicking here a new window/tab will open on your screen to this article as it appears at SeekingAlpha.com.
Receive my Seeking Alpha articles by email: When viewing one of my articles at Seeking Alpha, click on the "Follow" button under my picture. You will be notified by email when I post a new article to Seeking Alpha.
Please enjoy reading this article at Seeking Alpha.
Many Happy Returns.
