Bank of America Preferreds

[Grenville]

BML-H - Merrill Lynch Preferred that is now a Bank of America Preferred

Current Price = 14.4

Par: 25

Call Date: 11/28/09

 

Semiannual interest: Libor + 0.65% with a floor of 3%

 

Current yield @ 14.4 ~ 5.2%

Typical trade price YTD ~ 17

Return to typical trade price YTD ~ 22%

Return to par ~ 74%

 

There's a whole host of preferreds to choose from but the floating rates are trading at the largest discount due to the lower interest payment. The upside is that there are trading at huge discounts to par.

 

Another similar floating rate pref BML-G

[mankap]

I bought BAC-I series preferred when BAC dropped to 6.

I bought it at 18 which yield around 9%.Face value is 25.

Even today it is trading at 21.6 at 7.3% yield.

I like the preferred , you have 30% upside and 9% yield.

It is not going to get impacted by dilution and drop in earnings.

 

I think the floating preferred will become more valuable when rates start going up.