Seaspan prices cumulative preferred stock; Western Alliance taps market; new supply eyed

By Stephanie N. Rotondo

Seattle, June 9 – The preferred stock market’s new issue pipeline continued to flow during Thursday’s session.

Seaspan Corp. brought a $100 million offering of 8.2% series G cumulative redeemable preferreds.

The deal was initially expected to be around $40 million, with price talk in an 8.25% area.

A trader saw the issue “around $24.70” in the early gray market.

RBC Capital Markets LLC, J.P. Morgan Securities LLC, Stifel Nicolaus & Co. Inc. and Incapital LLC are leading the deal.

Proceeds will be used for general corporate purposes.

Also announced Thursday was an offering of at least $100 million $25-par subordinated debentures due 2056 from Western Alliance Bancorporation. The deal came at 6.25% – in line with price talk – with $175 million of the debentures being sold.

“It’s not a well-known bank, but it is a financially solid bank,” one market source noted.

Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are running the books.

A trader said the paper was quoted at $24.67 bid, $24.75 offered in the early gray market.

As for other deals from the week, they continued to be in focus.

“There’s a lot of new issues to put away,” a trader said, opining that it would take some time for the deals to get put away. “But that’s a good problem to have.”

From Wednesday, Wells Fargo & Co.’s $1 billion of 5.5% series A class A noncumulative preferreds had freed to trade as of mid-morning, according to a trader.

The trader pegged the issue at $24.95 bid, par offered early in the day. After the close, another market source saw the paper closing at $25.08.

Maiden Holdings Ltd.’s $110 million of 6.625% $25-par notes due 2046 – a deal from Tuesday – were meantime seen at $24.92 bid, $24.97 offered.

And, Validus Holdings Ltd.’s $150 million of 5.875% series A noncumulative preference shares were see trading at $24.90, up 7 cents day over day at mid-morning. The shares gave up some of those gains by the bell, ending up just 2 cents at $24.85.

That issue priced Monday and is trading under the temporary ticker symbol “VRHSP.”

As for new listings, NextEra Energy Capital Holdings Inc.’s 5.25% $25-par series K junior subordinated debentures due June 1, 2076 were admitted to the New York Stock Exchange on Thursday.

The ticker is “NEEPK.” The deal came May 31. On Tuesday, the company said $70 million of its $75 million greenshoe had been exercised, bringing the total outstanding principal amount to $570 million.

The debentures were placed around par at mid-morning, finishing at $25.01.

Fannie, Freddie mixed

Trading in Fannie Mae and Freddie Mac preferreds continued to be busy in Thursday trading.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were slightly better at $4.7323, with nearly 1.7 million of the shares trading. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were steady at $4.65, on about 1.27 million shares trading.

The GSEs’ preferreds have nearly dominated every trading session for the last couple of weeks, as ongoing lawsuits have brought out more information about the government’s decision to commandeer a majority of the mortgage agencies’ profits. The information has been viewed as positive for plaintiffs that allege the so-called “net worth sweep” was unlawful.

In the wake of that information, Democrats and Republicans alike have been calling for a renewed focus on GSE reform, some even going so far as to say that Fannie and Freddie should be allowed to hold more of their profits in order to build up a cushion to protect themselves – and taxpayers – in the event of another downturn.

And while groups like the Community Home Lenders Association, the Community Mortgage Lenders of America and the Independent Community Bankers of America have been pro-capital cushion, others have not been.

In a letter sent Wednesday to the Federal Housing Finance Agency, the American Bankers Association, the National Association of Realtors, the National Association of Home Builders, the Mortgage Bankers Association and the National Housing Conference urged that the GSEs must be reformed from congressional action.

“Policymakers need to continue to focus on the paramount objective of fixing the structural flaws that led to the breakdown of the housing finance system – the only outcome that will protect taxpayers, preserve access to credit, and ensure a stable housing finance system,” the letter said. “Absent reform, we run the risk of continuing to kick the can down the road without ensuring ongoing access to mortgage credit for millions of future homeowners.”

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