Annaly Capital sells massively upsized deal tighter than early talk; Fannie, Freddie rise

By Stephanie N. Rotondo

Seattle, July 25 – A new issue hit the preferred stock primary market on Tuesday as Annaly Capital Management Inc. brought an upsized $700 million offering of 6.95% series F fixed-to-floating rate cumulative redeemable preferreds.

Initial price talk was 7% to 7.125%. The size of the deal was also increased from an expected $200 million.

Once the deal launched at the larger size and tighter rate, the gray market quotes “backed off,” a market source said, adding that it was “not a surprise.”

He pegged the paper at $24.81 bid, $24.86 offered in the gray.

At mid-morning, a trader saw the issue quoted at $24.85 bid, par offered in the gray.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, UBS Securities LLC, RBC Capital Markets, Citigroup Global Markets Inc. and Keefe Bruyette & Woods Inc. are running the books.

The dividend rate will be fixed until Sept. 30, 2022, at which time it will float at Libor plus 499.3 basis points.

The New York-based real estate investment trust plans to use a portion of the proceeds to redeem its $185.3 million outstanding 7.875% series A cumulative redeemable preferreds (NYSE: NLYPrA).

That issue dropped 55 cents, or 2.12%, to $25.40.

Away from the new issue, Fannie Mae and Freddie Mac’s preferreds continued to climb upward in active trading, though the preferred space as a whole continued to weaken.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.