Entergy Arkansas taps market with $25-par bond sale; CapLease preferreds mixed; BofA gains

By Stephanie N. Rotondo

Phoenix, May 28 - The abbreviated week started off with two new deals hitting the preferred stock market on Tuesday.

Entergy Arkansas Inc. said it was looking to price at least $125 million of $25-par first mortgage bonds due 2063.

Price talk was 4.75% to 4.875%. The deal came at the tight end of talk, with exactly $125 million shares being sold.

Meanwhile, New York Mortgage Trust Inc. announced an offering of series B cumulative redeemable preferreds. A source said the company was planning to sell at least $50 million of the preferreds, with price talk around 7.875%.

The company upsized the offering to $75 million, with the preferreds being sold at par to yield 7.75%.

The deal will be non-rated. A market source pointed to that fact as a reason for it not being very active during the day's session.

In the secondary, CapLease Inc.'s preferreds were mixed following news of a merger with American Realty Capital Properties Inc. As a result of the $2.2 billion deal, American Realty will buy all of CapLease's outstanding preferreds.

And, Bank of America Corp. formally announced a redemption of its Merrill Lynch-linked 6.7% series 6 noncumulative and 6.25% series 7 noncumulative preferreds. The bank had first said it was planning to call the securities the week prior when it priced a $1 billion issue of 5.2% $1,000-par series U fixed-to-floating rate noncumulative preferreds.

Overall, the preferred stock market was a "sea of red," according to one source. While the equity market was hitting new highs, Treasuries were trading off following new positive economic data, the source explained as a possible reason for the sector's dip.

Entergy prices

Entergy Arkansas brought $125 million of 4.75% $25-par first mortgage bonds due 2063 on Tuesday.

A trader said he saw a $24.65 bid for the bonds in the midday gray market.

After the close, a source said the paper "kind of collapsed at the end of the day," seeing the issue at $24.60.

Proceeds will be used along with other corporate funds to redeem $300 million of 5.4% first mortgage bonds due in August. Any remaining proceeds will be used for general corporate purposes.

Entergy Arkansas is a Little Rock, Ark.-based energy provider.

CapLease mixed on merger

CapLease's preferreds were mixed in Tuesday trading on the back of news regarding a $2.2 billion merger with American Realty Capital Properties.

The 8.125% series A cumulative redeemable preferreds (NYSE: LSEPA) rose 7 cents to end at $25.50. The 8.375% series B cumulative redeemable and 7.25% series C cumulative redeemable preferreds, however, were down. The Bs (NYSE: LSEPB) fell $1.50, or 5.49%, to $25.80, while the Cs (NYSE: LSEPC) declined $2.39, or 8.58%, to $25.45.

American Realty will buy all of the outstanding preferreds as part of the buyout agreement. Holders of the securities will receive $25.00 plus accrued dividends.

The merger is expected to be completed in the third quarter of 2013.

Bank of America calls issues

Charlotte, N.C.-based Bank of America formally announced a redemption of its Merrill Lynch-linked 6.7% series 6 noncumulative and 6.25% series 7 noncumulative preferreds on Tuesday.

The 6s (NYSE: BMLPN) gained 20 cents, closing at $25.72. The 7s (NYSE: BMLPO) rose 6 cents to $26.08.

Last week, the bank priced a $1 billion offering of 5.2% $1,000-par noncumulative preferreds, the proceeds of which were intended to be used for the redemption of the series 6 and 7 securities.

Both issues will be called on June 28. A market source pointed out that the redemption will take out $75 million from the preferred stock market.

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