Capstead prices in line with talk; Freddie posts profit, preferreds get busy; Allianz up

By Stephanie N. Rotondo

Phoenix, May 8 - Capstead Mortgage Corp. announced a new issue for the midweek session.

The Dallas-based real estate investment trust said it would sell series E cumulative redeemable preferreds. A trader said price talk was around 7.5%.

The deal priced after the close, coming in line with talk and with $150 million shares being sold.

As for secondary issues, a trader said "we're seeing a little more action in Freddie Mac and Fannie Mae." He remarked that there were "strong buyers" for the agency preferreds after Freddie reported its first-quarter results.

Also, Allianz SE said that it was calling all $2 billion of its 8.375% undated subordinated callable bonds.

"I've been waiting for that one for months," a market source said. The source said the issue had "a lot of volume" considering it is unlisted.

Capstead prices

Capstead Mortgage brought $150 million of 7.5% series E cumulative redeemable preferreds on Wednesday.

A trader saw the issue trading at $24.90 in the midday gray market.

The Dallas-based real estate investment trust intends to use proceeds to call its $1.60 series A cumulative convertible preferreds and its $1.26 series B cumulative convertible preferreds.

The As (NYSE: CMOPA) dropped 35 cents, or 1.57%, to $21.95, while the Bs (NYSE: CMOPB) - the more active of the two issues - declined by $2.71, or 17.71%, to $12.59.

Recent deal tidbits

In other recent deals, Saratoga Investment Corp.'s $42 million of 7.5% $25-par fixed-rate notes due 2020 - a deal that priced Friday and freed up on Tuesday - were quoted at $25.05 bid, $25.10 offered.

Tsakos Energy Navigation Ltd.'s $50 million of 8% series B cumulative redeemable preferreds were meantime dubbed "a dog" by one trader.

"They've just been sitting there at $24.50," he said of the issue that priced on Thursday. "It's probably a manager."

And, PNC Financial Services Group Inc.'s 4.85% $1,000-par fixed-to-floating rate noncumulative perpetual preferreds were pegged at "101-plus" bid.

That deal also priced Thursday.

Freddie, Fannie on the rise

Freddie Mac and Fannie Mae preferreds saw a hefty amount of trading on Wednesday after Freddie reported quarterly earnings.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) ended the day unchanged at $4.70, on more than 14.5 million shares traded. Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) meantime rose 7 cents, or 1.55%, to $4.59.

Over 39 million shares changed hands.

Freddie reported net income of $4.6 billion for the first quarter of 2013, its second best quarter ever. The agency's net worth totaled $10 billion. Under the rules of its conservatorship, the mortgage guarantor must pay anything over $3 billion to the U.S. Department of Treasury.

"It's causing a lot of speculation," a market source said, referring to what will happen to both Fannie and Freddie after the conservatorship comes to an end.

Meanwhile, Fannie said late Tuesday that it had reached a $153 million settlement with plaintiffs of a class-action lawsuit that alleged the company fraudulently misled investors, including Ohio pension funds.

A market source said that Fannie is slated to release earnings on Thursday, though he remarked that the schedule could change.

Allianz calls bonds

Munich, Germany-based financial services company Allianz announced a call of its 8.375% undated subordinated callable bonds on Wednesday.

"There was a lot of volume for this issue," a market source said.

Technically, he said, the issue ended up 7 cents at $25.47. However, he noted the volume weighted average price was probably more accurate at $25.42.

The bonds will be called at par plus accrued interest on June 17.

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