Overview | Process | Credit Quality | Callable Features | ID Requirements | Fees
Fixed Rate Callable Corporate Securities are fixed income notes purchased at the FISN Division of Landolt Securities, Inc. National Financial LLC provides Clearing, Custody and Safekeeping services for Landolt Securities. Corporate securities offered by the FISN Division of Landolt Securities, Inc. carry an investment grade credit rating and are liquidated in the secondary over-the counter market. Callable investments offer higher rates than non-callable notes but in return the issuer has the right to return the funds early.
The call decision is made solely by the issuer, not the investor or the brokerage firm. Corporate issuers use brokerage firms to distribute these investments nationwide. The FISN Division of Landolt Securities, Inc. has access to inventory from most Wall Street firms. Investors can select corporate securities that meet their needs for credit quality, yield and return of principal.
Even though this security is it a corporate debt security it is a complex instrument; the instrument is far more complicated than the traditional corporate bond with a fixed interest rate and maturity. Investors are urged to read the Prospectus carefully and talk to their FISN representative before selecting an investment.
Investors open a standard brokerage account at the FISN Division of Landolt Securities, Inc. Accounts are held at National Financial Services LLC., which provides Clearing, Custody and Safekeeping services for Landolt Securities. A brokerage account may hold many different securities. It is not necessary to open a new account for each security purchase. If you already have an FISN brokerage account, you may purchase your income investments immediately. If you have opened a new account you need to fund the account by sending a fed funds wire or a check. Once funds have been received, you may begin purchasing securities.
The FISN Division of Landolt Securities, Inc. sends new account paperwork and any additional brokerage forms to the customer or they may be downloaded from our Forms page. Paperwork is returned to the FISN Division of Landolt Securities, Inc. along with the required identification. See ID requirements below.
Confirmation of each securities trade and account statements are sent for each account to the investor from National Financial Services LLC on behalf of the FISN division of Landolt Securities.
Issuers of Income Investments offered by the FISN Division of Landolt Securities, Inc. carry an Investment Grade credit rating. Non-Investment grade securities (a rating below BBB) are occasionally offered and are labeled as such. Low rated investments are often termed “junk” for a reason.
A credit rating is the measurement of the financial strength of a bond issuer. This measurement helps an investor understand an issuer’s ability to make timely interest payments and repay the investment principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the perceived risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies. The securities are not bank deposits and are not FDIC insured, even when the issuer is a bank. The FDIC insures bank deposits not bank-issued securities. .
The following is an explanation of the top credit ratings. The rating for each individual investment should be evaluated based the rating criteria. Both credit rating of the issuer and the credit rating of any underlying security of the investment (such as Reverse Exchangeable securities) should be considered when making an investment decision. Credit ratings fluctuate with business conditions. Upgrades and downgrades in credit ratings change the risk profile of issuers and possibility the market prices of their securities.
Long Term Credit Ratings
AAA ratings denote the highest rating assigned. This rating is assigned to the "best" credit risk relative to all other issuers or issues.
AA ratings denote a very strong credit risk relative to other issuers or issues. The credit risk inherent in these financial commitments differs only slightly from the highest rated issuers or issues.
A ratings denote a strong credit risk relative to other issuers or issues. However, changes in circumstances or economic conditions may affect the capacity for timely repayment of these financial commitments to a greater degree than for financial commitments denoted by a higher rated category.
BBB ratings denote an adequate credit risk relative to other issuers or issues. However, changes in circumstances or economic conditions are more likely to affect the capacity for timely repayment of these financial commitments than for financial commitments denoted by a higher rated category.
Below Investment Grade
BB ratings denote a fairly weak credit risk relative to other issuers or issues. The payment of the financial commitments is uncertain to some degree and capacity for timely repayment remains more vulnerable to adverse economic change over time.
B ratings denote a significantly weak credit risk relative to other issuers or issues in the country. Financial commitments are currently being met but a limited margin of safety remains and capacity for continued timely payments is contingent upon a sustained, favorable business and economic environment.
See Corporate Bond Ratings chart for a simple description and comparison of credit quality ratings issued by S&P, Moody’s and Fitch.
Callable corporate securities are unsecured and unsubordinated obligations of the corporate issuer. The issuers are major U.S. corporations and are not FDIC insured. The FDIC insures deposits and not the debt of a corporation. Callable notes have an initial non-callable term and a callable term and pay interest at a fixed rate over the life of the investment. The interest is usually paid on a semi-annual or monthly basis into the brokerage account where it can continue to earn interest in a money market fund account. At the end of the non-callable period, the security may be called for the full amount of the investment. When called, the issuer returns the amount to the brokerage account with full interest to date. If not called, it remains callable, usually on the interest pay date. Only the issuer can make the call decision, not the account holder or the brokerage firm. The security will continue to pay interest for the full, possible term if it is never called.
Key information is the name of the issuer, the issuer credit quality, the first call date, any subsequent call dates and the final stated maturity-the end of the possible term.
There is no early withdrawal on corporate securities but the investment can be sold in the secondary over-the-counter market. Securities sold prior to maturity are subject to market conditions and could result in a loss.
Interest paid into the brokerage account can be paid out via checks or electronic funds transmission straight to your local bank. You can set up a payment schedule called a "Custom Payment/Earning Plan. The form is available on the Forms page. Available cash also can be withdrawn from the account via checks, automatic teller machines or debit card. There may be fees for accounts with ATM or debit cards
See An Investor’s Guide to Corporate Bonds.
Income Investments are held in a Brokerage account of the FISN Division of Landolt Securities, Inc. Securities in Landolt Securities accounts are carried by National Financial Services LLC, Member NYSE/SIPC, a Fidelity Investments company which provides Clearing Custody and Safekeeping services.
The FISN Division of Landolt Securities, Inc. is required under the Patriot Act to verify the identity of individuals and entities. Individuals are required to provide a copy of a current government issued, photo identification. Business accounts, trusts and other non-individual accounts have special requirements. Ask your FISN Representative what documents will be required to open up a particular type of account.
There are no investment fees or commissions paid by the investor for interest income investment. The issuers of the securities pay brokers to distribute their newly issued securities nationwide. New issue securities are sold at par or a price of 100.00 for each $100.00 of the issue bought by investor. Par is the face amount of the investment on which interest is earned. Most investments require a minimum purchase amount. Secondary market securities are bought from or sold net to the investor without an additional commission, and are usually offered at a current market price indicating a discount or premium to par because interest rates have changed-whether up or down-since the security was first issued.