September’s calendar expands with deals from KeyCorp, Monmouth; Morgan Stanley active

By Stephanie N. Rotondo

Seattle, Sept. 6 – The preferred stock primary market was back in action on Tuesday, as KeyCorp and Monmouth Real Estate Investment Corp. announced new deals.

“Everybody said the calendar would start up again in September and here we are,” a trader commented.

KeyCorp said it was selling $525 million of $1,000-par series D fixed-to-floating rate noncumulative perpetual preferreds via Morgan Stanley & Co. LLC, Goldman Sachs & Co., J.P. Morgan Securities LLC and KeyBanc Capital Markets.

A trader said he was hearing price talk at 5.125%.

“I would venture a guess they price it right around 5%,” he said.

After the close, a market source said the deal was coming at 5%, though he had not seen any further details.

The source pegged the issue at 100.75 bid, 100.875 offered.

Dividends will be payable on a quarterly basis. The dividend will be fixed through Sept. 15, 2026. After that, the rate will float at Libor plus a spread.

The preferreds become redeemable on or after Sept. 15, 2026 at par plus accrued dividends or in whole within 90 days of a regulatory capital treatment event.

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures, investments in or loans to subsidiaries, refinancing of outstanding debt or capital securities, share repurchases, dividends, funding potential acquisitions and the satisfaction of other obligations.

Meanwhile, Monmouth Real Estate was bringing “a little deal,” according to a trader.

After the bell, a source said the deal launched at $100 million, coming at the tight end of the 6.125% to 6.25% price talk. Pricing details revealed that $135 million of the preferreds were actually sold at 6.125%.

RBC Capital Markets, BMO Capital Markets and JPMorgan are running the books.

The trader saw the issue at $24.88 bid, $24.97 offered in the early gray market.

The company plans to use the proceeds to redeem the 7.625% series A cumulative redeemable preferreds (NYSE: MNRPA). That paper was weaker in the wake of the new deal, falling $1.11, or 4.24%, to $25.05.

Among established issues, trading was “pretty light,” a market source said. However, he noted that Morgan Stanley & Co. Inc.’s 6.875% series F fixed-to-floating rate noncumulative preferreds (NYSE: MSPF) bucked the overall trend, trading over 2.05 million times.

The paper ticked up 2 cents to $30.02.

The source said there was no specific reason for the heavy volume but added that the 3.88% yield to call in eight years was “not too bad.”

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