Friday, January 2, 2009

Aegon Perpetual Preferred & XKK/ Comments to these Posts

Added 3/7/2010: A more comprehensive discussion of the AEGON hybrids can be found in this post written in December 2009, which also has links to my other discussions relating to these securities: Aegon Hybrids: Gateway Post

Original Post:

I checked the Aegon web site this morning and believe that I tied the symbols for three Aegon perpetual preferred stocks to the correct prospectus in my post last night. Need to Read the Applicable provisions in each one/ Links included

This can be done by anyone checking the data on the Aegon web page. Capital securities - AEGON Group

There is another perpetual preferred issue, AED, and this is the SEC link to that one:

What is one of the main limitations preventing a company from deferring a preferred stock dividend? Has Aegon and ING eliminated their common stock dividends, at least for now? Sure, they might resume paying a common dividend next year but both could do an optional deferral on the preferred securities right now. You have to be able to answer all of these types of questions for yourself before venturing into this area. This would include a lot more than the deferral issue. For a company like Aegon, besides issues relating to its ability to pay debt, there is just a need to know the entity who issued the debt . Debt programs - Aegon
If it is issued by a subsidiary in a holding company structure, does the parent guarantee the debt? Throughout these posts, I discuss the myriad of issues involved in my selection of different types of securities. I would have to say that the deferral risk is a heightened consideration whenever the main impediment to optional deferral is removed, meaning payment of a dividend on a junior security. This is a concern for a speculative REIT cumulative preferred stock that I bought recently, BEEPRA, where my concern is much higher about a deferral than with my current positions in AEB, INZ, and IND.

There was a comment that was posted in mid December about this post from mid NovemberEmerson Electric Great Plains Energy & Trust Certificate Dividends I may not see a comment posted that far back. The question had to do with the debt level in Goodyear Tire which is always a relevant question for someone owning or trying to decide whether or not to own a senior Goodyear Tire bond. This question had to do with the TC XKK which I have discussed in these posts. A lot of my discussion can be found by entering separate search terms Goodyear or XKK, in the search field at the top of this blog. I would enter each term separately because sometimes I may just discuss Goodyear without mentioning XKK. Most of the information about debt can be found at the SEC web site, and I am no better or worse than anyone else in reading these 10-q filings and annual reports. This is a link to the SEC web site for those who are not familiar with it. Search the EDGAR Database Under General Purpose Searches, click "Companies & Other Filers" and then enter the company name.

I mentioned in my comment that the yield on TC XKK would be 16% at a purchase of $5. So, for example 100 shares bought at 5 would cost $500 excluding commission and the dividend would be annually $80. The yield would by $80 divided by $500=16%. Now if someone gave me 100 shares of XKK, that computation is not relevant. I would just be receiving $80 a year for every 100 shares owned. In those circumstances, the relevant questions are the normal questions, such as the ability of the company to pay the interest or dividends as the case may be, the seniority of the debt positions, the maturity date, profit potential by holding to maturity, the existence and amount of more senior debt such as secured debt, the maturity schedules of the debt, the ability of the company to refinance debt as it comes due in the current or reasonably predictable credit climate, and any other news that might adversely impact the bond position such as major litigation.

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