Morning Commentary: STAG Industrial offers preferreds; AmTrust, Legg Mason, BB&T get attention

By Christine Van Dusen

Atlanta, March 9 – STAG Industrial Inc. prepped a new issue of preferred stock on a firm Wednesday morning for the market.

“We’ve really recovered everything that was beat up in February and in January; so, certainly the market is showing good signs of resilience, as far as preferreds go,” a trader said. “With that tightening up, the new issue machine has kicked on, because guys need to raise capital.”

In trading, AmTrust Financial Services Inc.'s Tuesday deal – $125 million of 7.75% series E noncumulative perpetual preferred stock – hovered between $24.60 and $24.65 after trading in the gray market at $24.65 bid, $24.70 offered.

“I'm guessing that will probably stay in syndicate until tomorrow morning,” the trader said.

Price talk was 7.75% to 7.875%, according to one market source. The deal came upsized from $75 million.

Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners. Keefe Bruyette & Woods Inc. is joint lead manager.

The New York-based financial services firm plans to use the proceeds for general corporate purposes.

From Monday’s business, Legg Mason Inc.’s $250 million of 6.375% $25-par junior subordinated notes due 2056 traded at $24.90 to $24.95 on Wednesday.

The notes were initially pegged at $24.78 bid, $24.85 offered and seen closing at $24.82 on Tuesday, up a penny from the previous day.

That deal was upsized from $150 million and came tighter than the 6.5% to 6.625% initial price talk.

Recent issues trade

Among the deals that priced last week, BB&T Corp.’s $425 million of 5.625% series H noncumulative perpetual preferreds were spotted at $24.90 on Wednesday after closing Tuesday at $24.82.

Southern California Edison Co.’s SCE Trust V’s $300 million of 5.45% fixed-to-floating rate trust preference securities – a deal from March 1 – traded Wednesday at $25.50 after Tuesday's $25.50 bid, $25.57 offered.

“That's a little rich for me,” the trader said.

STAG plans issuance

STAG Industrial is planning to issue series C cumulative redeemable preferred stock with a $25.00 liquidation preference, according to a company filing.

Dividends will be payable quarterly on or near the last day of March, June, September and December, beginning June 30.

Morgan Stanley, BofA Merrill Lynch, Raymond James and Wells Fargo Securities are leading the transaction.

The preferreds will include a change-of-control put.

The proceeds will be used to fund acquisitions, to repay debt and for general working capital purposes.

The issuer is a Boston-based real estate company.

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