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Entergy Arkansas first mortgage bond, Rexford Industrial Realty deals upsized, price
By Stephanie N. Rotondo
Seattle, Aug. 9 – The preferred stock market’s new issue pipeline remained open on Tuesday as Entergy Arkansas Inc. announced plans to sell $25-par first mortgage bonds.
Additionally, Rexford Industrial Realty Inc. priced series A cumulative redeemable preferreds. The offering was first announced on Monday.
Entergy Arkansas came with $410 million of 4.875% first mortgage bonds, in line with price talk.
A trader said there was no selling group. Wells Fargo Securities LLC, BofA Merrill Lynch and Morgan Stanley & Co. LLC ran the books.
“It’s small,” he said of the initially proposed $200 million offering. “The coupon is a little rich for my blood.”
He saw the issue at $24.80 bid in the early gray market.
Post-pricing, the trader quoted the issue at $24.90 bid, $24.95 offered.
On the heels of the deal, the 5.75% $25-par first mortgage bonds due 2040 (NYSE: EAA) declined 55 cents, or 2.11%, to $25.49. However, the 4.9% $25-par first mortgage bonds due 2052 (NYSE: EAB) rose a dime to $25.47.
Both issues saw above-average trading volume.
Proceeds will be used, along with available funds, to redeem $85 million of preferred stock paying dividends at 6.08% to 6.45%, to redeem $325 million of first mortgage bonds maturing between 2033 and 2040 that pay interest between 5.75% and 5.9% and for general corporate purposes.
Meanwhile, Rexford came with $90 million of 5.875% cumulative redeemable preferreds.
When the transaction was first announced on Monday, price talk was 6% and the size was slated to be $75 million.
BofA Merrill Lynch and Wells Fargo led the sale.
A trader said the paper was bid at $24.90 at mid-morning.
The Los Angeles-based real estate investment trust will contribute proceeds to the operating partnership in exchange for series A preferred units. The operating partnership will then use the funds for potential acquisitions and for general corporate purposes.
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