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Subject:  Re: TLT vs WFC.PR.L Date:  2/26/2020  2:33 AM
Author:  aj485 Number:  85583 of 87023

The par is $1000 and quoting at $1538 and goes ex-dividend on 2/27 with 18.5 Quarterly dividend. The conversion price for this is $156.71 far away from current price of $45.

I already own WFC-L, although I purchased it at a much lower price. When it was at those lower prices, I recommended it, along with BAC-L, which I have also owned. (I actually arbitraged between these 2 for a while when there were some pricing discrepancies that seemed to go back and forth.) That said, I haven't been recommending either of these since they breached their conversion value of $1,300. While I agree that the WFC common increasing to ~3.5 times the current value to force a conversion of WFC-L is unlikely in the near future, it is possible if this is intended to be a long term holding. If a forced conversion happens, current buyers will have a capital loss.

The likelihood of BAC common just over doubling (from the current $31 to the conversion price of $65) is probably higher, and since BAC-L is priced above WFC-L ($1544 vs. $1538 on today's close) and WFC-L has a coupon rate of 7.5% vs. BAC-L's 7.25%, WFC-L is obviously the better buy of the two currently. But I'm not sure I would be buying either at these prices.

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