New preferred issues steady; market trades ‘pretty much flat’ early, improves by the bell

By Stephanie N. Rotondo

Seattle, Nov. 10 – Recent preferred stock deals were holding their ground in Tuesday trading, according to traders.

American Financial Group Inc.’s 6% $25-par subordinated debentures due 2055 – a $150 million deal that priced Monday and was upsized from $100 million – were pegged at $24.94 bid, $24.97 offered.

“That’s pretty much where it went out yesterday,” the trader said around mid-morning.

There was a little pop later in the afternoon, as another trader placed the paper in a $25.02 to $25.07 context.

In the company’s other outstanding issues, the 6.25% $25-par subordinated debentures due 2054 (NYSE: AFGE) improved 9 cents to $26.24.

BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

Interest will be payable quarterly, beginning Feb. 15, 2016. The company has the right to defer interest payments for up to five consecutive years.

Proceeds will be used for general corporate purposes, which may include common stock repurchases.

As for Citigroup Inc.’s 6.125% $1,000-par series R fixed-to-floating rate noncumulative perpetual preferred stock, it was “hanging right around” 100.125 bid, 100.25 offered, a trader said.

A second trader saw the preferreds around 100.25 as well.

That $1.5 billion issue came Thursday via Citigroup Global Markets Inc.

As for the 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPN), they were up 18 cents at $25.65.

When declared, dividends will be payable at a fixed rate on a semiannual basis through Nov. 15, 2020. Beginning Feb. 15, 2021, the preferreds will begin to float at Libor plus 447.8 basis points and will be paid quarterly.

Proceeds will be used for general corporate purposes, which may include funding subsidiaries, financing acquisitions or growth or refinancing or extending the maturities of outstanding debt.

As for the secondary, a trader said things were “pretty much flat” at mid-morning.

The Wells Fargo Hybrid and Preferred Securities index was gyrating in early trades, falling 2 bps, then coming back to even and then rising 2 bps. The index ultimately closed up 24 bps, stemming losses seen Monday and Friday.

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