Midday Commentary: Invesco, CommonWealth to bring new deals; Black & Decker notes take off

By Stephanie N. Rotondo

Phoenix, July 19 - More new issues were flooding the preferred stock market Thursday, as Invesco Mortgage Capital Inc. and CommonWealth REIT announced plans for new securities.

However, a trader said he had "not seen much trading" in either issue, though they appeared to be performing fine. He speculated that retail investors - which were reportedly taking a shine to the Invesco deal "because of the high coupon" - were taking a bit of a pause, given all the new deals that have come so far this week.

The trader further commented that the calendar was expected to remain busy in the near term.

As for Thursday's new deals, Invesco said it would issue at least $100 million of series A cumulative redeemable perpetual preferreds. Price talk is around 7.75%, according to a trader.

The trader said he had not seen any street markets for the paper.

Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners. JMP Securities, Keefe, Bruyette & Woods and Mitsubishi UFJ Securities LLC are the co-managers.

Proceeds will be used to purchase agency residential mortgage-backed securities, non-agency RMBS, commercial mortgage-backed securities and certain residential and commercial mortgage loans.

CommonWealth REIT meantime announced an offering of at least $150 million $25-par senior notes due 2042, talked at 5.75% to 5.875%.

The notes were seen at $24.63 bid, with no offers, in the gray market, a trader said.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities and Wells Fargo Securities are the joint bookrunners. Joint lead managers are Jeffries & Co. Inc. and RBC Capital Markets LLC.

Proceeds will be used to repay outstanding amounts under a revolving credit facility and for general corporate purposes, which may include future acquisitions.

After paying down the credit facility, the company intends to use the available borrowings to redeem some or all of its outstanding 7.125% series C cumulative redeemable preferreds.

Also, Stanley Black & Decker Inc.'s new $750 million issue of 5.75% $25-par junior subordinated notes due July 25, 2052 "took off this morning," a trader said, hitting a high of $25.30 before "leveling off" to $25.27 bid.

The deal priced Wednesday and came upsized from $200 million.

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