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New Issue CD Available At Scottrade This Week

enduser
  |     |   711 posts since 2015

This will be my first time to invest in a new issue CD so I'm asking the community for their opinion if this is a good investment. I have 15K parked in a IRA that I have not done anything with in years. I was reading the article on brokered CD's so I had a look at Scottrade and found this offering by Alcentra Capital Corporation. Minimum order is 5. The period is 5 years, not concerned about that at all. The terms are as follows:

New Issue Taxable Alcentra Capital Corporation

Offering Period: 06/06/2016 - 06/13/2016

Maturity Range: 2021-2021

Settlement Date: 06/16/2016

Prospectus

Offer Information     

Qty    Maturity      Coupon    Yield    Price        Int Pay Freq                CUSIP

------------------------------------------------------------------------------------------------

5       06/15/2021   6.375      6.375  100.000    First Coupon Date    Call Schedule

                                                                         Semi-Annually           01374TAP7

                                                                         12/15/2016                06/15/[email protected]       

Comments     

Survivor's Option - Survivor's Option - **A- Rating from Egan Jones**

Order Pricing              Bond Equiv Yield: 6.375         Principal     $5,000.00

Price:     100.000         Yield to Worst:   N/A              Total Dollars:     $5,000.00

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2


Answers
me1004
  |     |   1,379 posts since 2010
Well, first, I don't know. I'm not even clear on what this is. That place might offer some brokered CDs, but this looks more like a bond than a CD. Either way, it appears it is callable, so they might cash it in early.

Is this even FDIC insured? I don't see anything suggesting it is.

It looks to be a security issued for Alcentra Capital Corporation. I Googled them -- not good. Look at that they say about themselves:
Alcentra NY, LLC is part of BNY Alcentra Group Holdings, Inc. (“Alcentra Group”), one of the world’s leading sub-investment grade credit asset managers focusing on the U.S. and European markets.
Sub-investment grade! I do believe that means junk bonds -- someone can correct me if I'm wrong. Yes, I see it says this says it has an A- rating -- but that seems to also back the idea it is a bond, not a CD and not FDIC insured.

But again, as I started, I don't know. But be very careful, make sure you really know what you doing before you leap for anything like this.
Reply
7
ChasR
  |     |   287 posts since 2013
I checked this out by logging on to my online account at Scottrade (I don't own anything in it at present).  It's listed under "new Issues: but it's a corporate junk bond, not a CD.  It isn't FDIC-insured.
Reply
4
ChasR
  |     |   287 posts since 2013
I decided to check this bond out on Incapital, which is the manager for the offering. They call it “investment grade,” which I guess they have a right to do because of that Egan rating.  I still call it “junk.”  Whatever you call it, it’s a non-FDIC-insured corporate bond, which means it’s off my investment radar screen.
Reply
5
enduser
  |     |   711 posts since 2015
@me1004, @ChasR, Thanks for the reply and the details. If something sounds too good to be true it usually is. I thought, wow what a gem of a CD, only to be shocked back into reality that it was a junk bond instead.
Reply
4


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