Newtek to price baby bond offering; preferreds break losing streak; Fannie Mae mixed

By Abigail W. Adams

Portland, Me., Feb. 15 – The silence of the preferred stock primary market was broken on Thursday with Newtek Business Services Corp. announcing plans to price $40 million of $25-par five-year fixed-rate notes prior to the market open.

Price talk is for a coupon of 6.125% to 6.375%, according to a market source.

After a week of seeing mostly losses, the secondary market saw gains on Thursday with both the Wells Fargo Hybrid & Preferred Securities Financial index and the U.S. iShares Preferred Stock ETF up at the market close.

The Wells Fargo Hybrid & Preferred Securities Financial index was up 0.10% and the U.S. iShares Preferred Stock ETF up 0.22% at Thursday’s close.

Fannie Mae’s preferreds were mixed on Thursday with some seeing gains and some losses during Thursday’s session. Trading volume for the preferreds was light after the government-sponsored enterprise posted fourth-quarter results on Wednesday and announced a need to draw from the U.S. Treasury.

In the first new offering of the week, Newtek plans to price $40 million of five-year fixed-rate notes after the market close on Friday.

The notes are non-callable until March 1, 2020 when they become freely callable. Interest will be payable quarterly.

Proceeds will be used to fully or partially redeem the company’s 7% notes due 2021, which have $40.3 million outstanding.

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