Today we discuss an investment-grade bond with all the hallmarks we continue to write about as a prospective addition to fixed-income portfolios. The bond has an attractive, low duration profile, a good balance sheet, and we are compensated with approximately 218 basis points of spread, well above the industry averages for investment-grade credit. The management team is generally seen as one of the best in their respective industry. This is the type of bond one could consider overweighting.

Here is another bond that should benefit from what we believe will be the Federal Reserve’s actions over the next 12 to 18 months. This regional bank has improving loan-book metrics and a strong capital structure. This company has long been an unloved bank largely due to its wide-ranging exposure to large commercial real estate projects. Many have discussed this risk over the last decade, and management has seen through economic recessions while continuing to grow the bank. Today, we have a bank that is more conservative than it was a decade ago, and these bonds benefit from the low-duration, floating-rate coupons we look for in this environment as the Federal Reserve is in the early stages of a multi-rate hike cycle. Rising Rates Helps This Bond And Company fixedincomebeacon.substack.c…

In this update brief, we look at BDC Saratoga Investment Corporation now that it has just reported new numbers. We update subscribers on the bond that we wrote about back in August. We also discuss some of the gymnastics the company is doing, with its regulatory asset coverage ratio increasing while underlying asset performance leaves much to be desired. Regardless, we still believe there is a value proposition at one fairly narrow part of the capital structure. This part of the capital structure does not include common shareholders. $SAR A Review of Saratoga Investment Corp fixedincomebeacon.substack.c…

Our view on what is happening with the DigitalBridge Preferreds. At least one preferred is worth monitoring through October. A few variables are at play, but preferred prices have remained fairly resilient over the last month, despite the known delisting of DBRG Preferreds. $DBRG $DBRG.PRH $DBRG.PRI $DBRG.PRJ A Brief Note about DigitalBridge Preferreds fixedincomebeacon.substack.c…

We had plans to write about a different bond, but a recent corporate action brought this particular bond to the forefront. For a bond maturing within the next 36 months, with good credit quality that has been fairly consistent over the last 24 months, and an almost 300-basis-point spread, it is an attractive value proposition. This opportunity comes at a time when finding good relative value is tougher than it was a couple of quarters ago. We believe the recent debt offering further strengthens the bond we’ll discuss tonight. Call Risk Relief Presents Compelling Low Duration Value fixedincomebeacon.substack.c…

Overall, this month’s rebalance brings some buying, which is an impressive feat given the dynamics we are hearing and estimating. We will discuss the variables at play. We project that most positions will experience LIGHT BUYING PRESSURE relative to their daily trading averages. This reverses what we correctly estimated last month (August). We estimate you will see ONE new fixed income position added to the PFF and THREE deletions as well. This will be known to all shortly, with the latest monthly update from PFF on the 1st. Happy Hunting! September 2026 PFF Rebalance fixedincomebeacon.substack.c…

We believe there is plenty of yield to collect by focusing on the higher parts of the capital structure in this given sector, and you don’t need to go to the lower parts of the capital structure (common equity and preferred equity) to try to be a hero. For this particular bond, we are able to limit duration while also collecting more than 400 basis points of spread, and in our opinion, a very attractive value proposition. Improving Asset Base and Funding gives us an Attractive 400+ Basis Points of Spread Opportunity fixedincomebeacon.substack.c…

We wrote a note to subscribers covering 4 fixed income positions that have benefited from the recent rate hike, and we included a couple of notes from our macro desk on their views on the direction the Fed Funds Rate is going over the next 12 months (Hint: It is not going lower). Higher interest rates are traditionally a headwind for fixed income, so diversifying a portfolio with floating-rate or reset-coupon fixed income instruments is very valuable. We will likely write another brief in a couple of months after the Fed raises rates again and cover another 4 floating/reset positions. Fixed Income Instruments that Benefit from the Fed Rate Hikes fixedincomebeacon.substack.c…

Today we uncover a lesser-followed bond that is in the process of seeing a nice boost in quality as a sister bond is experiencing a partial redemption, which will bring down leverage levels and increase asset coverage ratios. If one were to observe the company’s common stock, one would be wary, and while one should always be skeptical of a poor-performing common stock price, the compensation for our bond is pretty attractive, yielding more than 300 basis points over the applicable US Treasury and possessing good and improving asset coverage. We are achieving more than 300 basis points of spread at a time when spreads are coming down quickly as US Treasury yields rise across the curve. Finally, the shorter duration of this bond amplifies the value proposition. More than 300 Basis Points of Spread from a Company Proactively Retiring Debt fixedincomebeacon.substack.c…

This position has almost everything a fixed-income investor could want. As the instrument has a floating-rate coupon, it benefits from the upcoming Federal Reserve rate hikes. Credit quality is improving, as is the overall operations of the company. Management has publicly stated its goal to maintain its investment-grade credit rating and will do what it takes to stay there. The investor collects more than 270 basis points of spread with little to no interest rate risk as the coupon resets every 90 days. Additionally, the maturity date is within 5 years. This particular bond has the variables that we look for when we identify possible fixed income investments for our broader portfolio. $RIY solana:4k3Dyjzvzp8eMZWUXbBCjEvwSkkk59S5iCNLY3QrkX6R $RAV $IWD $RLV $MID $MDY $SPTMI $BKX $RLG base:0x38f9bf9dce51833ec7f03c9dc218197999999999 Improving Credit Quality and Low Duration is a Good Combination fixedincomebeacon.substack.c…

Overall, this month’s rebalance brings some selling. We project that a majority of positions will be experiencing MODERATE-to-LIGHT SELLING PRESSURE relative to their daily trading averages. This reverses what we correctly estimated last month (July). We estimate you will see ONE new preferred/bond position added to the PFF, but FOUR deletions as well. This will be known to all shortly, with the latest monthly update released on the 1st. Also, on Thursday we will release our first bond brief for September to paid subscribers. August 2026 PFF Rebalance fixedincomebeacon.substack.c…

We believe this investment opportunity should interest a wide range of fixed-income investors. The investment offers a spread of more than 220 basis points and a low-duration profile. An investment-grade credit ratings, along with strong guidance from management earlier this month, supports the investment. The combination of strong asset coverage, improving leverage guidance, and the financial interests of a mega-cap firm presents an attractive fixed-income relative-value opportunity. Attractive Risk-Adjusted Carry for a Company with Good Guidance (and a giant backer) fixedincomebeacon.substack.c…

The following is an attractive subordinated bond from a regional bank that has improved in both balance sheet and profitability. Additionally, the bank is in the early stages of digesting a recently closed target. Management remains confident in the integration and has even raised projections. The estimated 7.5% yield to maturity is good, especially when paired with a shorter duration profile as the instrument resets its coupon yield in 2028. These are the types of positions you can use to build a broader portfolio. Good and improving credit metrics, short duration, and solid spread pickup allow for a good value fixed income opportunity. A Subordinated Bond with a “Lower Spread” that Still Represents Value fixedincomebeacon.substack.c…

Right now, PFF is having another quiet month on the addition/deletion front, and we estimate one deletion and one addition. The one deletion, however, could be interesting for some at month’s end. Again, this is subject to change, and we still have more than half of the month to go. Read on for the full breakdown of what's in, what's out, and why it matters for anyone positioning ahead of the next rebalance. Mid-Month Estimate of PFF's Latest Constituent Changes for August fixedincomebeacon.substack.c…

As we did last month, we will review the prior month’s estimates of additions and deletions from the PFF to assess whether our estimates were correct. Additionally, we will comment on any random events that we believe are important. During last week’s report (see below), we estimated there would be one addition and one deletion. Open to the public! A July 2026 PFF Rebalance Review fixedincomebeacon.substack.c…

The Fed near-term forward spread has rebounded to about +0.65, up sharply from lows near negative -2.2 in mid-2023. Former Fed Chair Powell has repeatedly pointed to this metric as his preferred spread. The Fed produced several research briefs on this metric and compared it to other spreads. This spread, which tracks expected policy rate changes over the coming 18 months, has climbed steadily since a trough around September 2024, suggesting traders increasingly expect the Fed to keep rates higher for longer and to deliver near-term rate hikes. The current reading sits well below the spread's 2022 peak near +2.7, when markets were pricing in substantial tightening, but it marks a decisive shift away from the rate-cut expectations from a year ago.

An Important Update to Citi TruPS Brief from the Editor: @JustBankStocks

Citigroup Capital XIII (NYSE: C-N, CPRN) is a fixed/floating-rate trust preferred security (TruPS) with a coupon that resets to three-month SOFR plus 663 basis points. The security currently yields approximately 10.3% and trades at a material premium to par. Although callable at par since 2015, the probability of a call has increased in 2026 due to Citigroup’s strong profitability, ongoing liability management, and management’s demonstrated willingness to accept near-term earnings impacts for long-term funding improvements. Given the heightened probability of redemption at par, purchasing this TruPS at a significant premium to par is inadvisable. Open to the Public $C Assessing Call Risk in Citigroup GFC-era Trust Preferred fixedincomebeacon.substack.c…

Sent yesterday to subscribers, we are projecting no $CNOBP call on September 1st. As a result, the qualified dividend will float and, as of right now, have an estimated coupon of 8.8%. This will make it one of the more attractive investment positions in the fixed-income world. We do not expect it to last this long, as the CFO recently said the company would benefit from its retirement. An Update on CNOBP open.substack.com/pub/fixedi…

We continue to believe that Home Depot has a stable yet cautious outlook for the credit. We note that reported comparable sales of 0.6% reflected subdued but anticipated demand. Full-year guidance was reaffirmed, although the upper end of the flat-to-up-2% comparable-sales range appears unlikely without a significant increase in big-ticket discretionary projects. The commentary also highlighted that margins remain under pressure due to recent specialty-distributor acquisitions and limited sales leverage, and that the timeline for deleveraging has been extended to mid-fiscal 2027. $HD Home Depot's Comps Hold, But Leverage Doesn't Budge open.substack.com/pub/fixedi…