FJA is a preferred listed on the nyse. The underlying asset interest that is owned in the preferred trust is embarq long- dated senior debt securities. The preferred pays dividends of 1.78, which equates to 17pct current yield and a discount to par of 55 percent (paying 45 cents on the dollar). Embarq is a decent, but not great credit... Wireline subscribers are shrinking 5-7pcercent, and debt leverage is high, but manageable for the business risk profile (2.2x levered). The company is switching subscribers of phone service over to dsl, which should limit the defections of subscriber base to digital cable. Another plus is that centurytel is acquiring embarq, which should result in better efficiency, larger size, and improved credit profile ( centurytel is more rural, thus more protected from cable penetration). Aside from these factors, long embarq debt trades around 65$, which is 20$ (42pct) higher than the implied purchase price via the FJA preferred. Thus the below-market price, high yield, and potential upside in credit profile make this security extremely attractive at prices below $12.50. Recommendation- buy FJA
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