The new issue

The total gross proceeds from the new issue are $42.5 million. You can find some relevant information about the new baby bond in the table below.

Source: Author's spreadsheet

Stellus Capital Investment Corporation 5.750% Notes due 2022 (NYSE:SCA) pay a fixed interest at a rate of 5.75%. The new baby bond carries no S&P rating and is callable as of 09/15/2019, maturing on 09/15/2022. SCA has started trading close to par and has 5.82% YTM and 5.92% YTC. The interest paid by this baby bond issued by SCM is NOT eligible for the preferential 15% to 20% tax rate. The new issue hasn't started trading yet and we don't know its temporary symbol ticker. This results in "qualified equivalent" YTM and YTC at a rate of 4.87% and 4.96% respectively.

From Quantumonline.com

Stellus Capital Investment Corp. is an exchange-traded closed-end fund or a closed-end ETF that is officially described as a closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940.

The Stellus Capital Investment Corp. seeks to maximize the total return to its stockholders in the form of current income and capital appreciation.

The Fund invests primarily in private middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA) through first lien, second lien, unitranche and mezzanine debt financing, often with a corresponding equity investment.

Stellus Capital Management serves as investment adviser to the fund.

Source: Cefdata.com

SCM has one outstanding bond: Stellus Capital Investment Corp 6.50% Notes due 4/30/2019 (NYSE:SCQ). The company uses the proceeds from SCA offering to redeem SCQ. In the table below, there is some information about the issue that SCM is redeeming.

Source: Author's spreadsheet

With this refinancing, SCM is saving themselves 0.75% on yearly basis.

Source: Author's spreadsheet

The image contains all baby bonds and preferred stocks issued in the Asset Management sector (according to Finviz.com) by their nominal yield.

The next chart contains all baby bonds that pay fixed interest and have less than 10 years to maturity.

Source: Author's spreadsheet

BDCs

Source: Author's spreadsheet

This chart contains all baby bonds and preferred stocks, issued by Business Development Companies by price and nominal yield.

Nothing out of the ordinary.

This is an informational article about the new baby bond SCA. With this articles, we want to pay attention to all new preferred stocks and baby bonds, and they are a good guide of what to expect from your income portfolio.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Stellus Capital Investment: This 5.75% Baby Bond Started Trading On NYSE - Seeking Alpha