Annaly Capital brings upsized new issue; Magnum Hunter falls on reopening; PS Business frees

By Stephanie N. Rotondo

Phoenix, Sept. 6 - The preferred market was heading higher Thursday given the announcement of the European Central Bank's bond-buying program.

"All is well," a trader said. "I think people will start rushing for yield if they think it's safe."

However, he added that they might not necessarily be rushing into the preferred market.

While the market was higher, it was not as firm as some would have anticipated.

"With everything going on in the equity market, you would have thought we'd be up more," a market source said.

Annaly Capital Management Inc. priced a sale of $400 million 7.5% series D cumulative redeemable perpetual preferred shares.

The deal came in line with price talk. A trader noted that three months ago, the non-rated company completed a sale of 7.625% series C cumulative preferreds, remarking that the 7.5% coupon is "in line for a non-rated [real estate investment trust] that buys mortgages."

The trader said the securities were "doing well" in the gray market.

Meanwhile, Magnum Hunter Resources Corp. said it was launching a "best-efforts" offering of up to $250 million of its 8% series D cumulative perpetual preferreds. The existing preferreds did not take the news well, falling more than 3% on the day.

A trader said that PS Business Parks Inc.'s $200 million 5.75% series U cumulative perpetual preferred shares, an issue that priced Wednesday, freed from the syndicate Thursday.

Annaly brings new issue

Annaly Capital Management announced and then priced a $400 million offering of 7.5% series D cumulative redeemable perpetual preferreds on Thursday.

A trader said the issue was performing well in the gray market ahead of pricing, seeing them trade at $24.85.

"That's pretty good considering the other two issues that are out there," he said.

The company's series Cs (NYSE: NLYPC) traded down 23 cents to $25.46. The 7.875% series A cumulative preferreds (NYSE: NLYPA) were also weaker, falling 66 cents, or 2.48%, to $25.98.

The New York-based company will apply to list the new series of preferreds on the New York Stock Exchange under the ticker symbol "NLYPD."

The joint bookrunning managers are Morgan Stanley & Co. LLC, Bank of America Merrill Lynch, UBS Securities LLC, J.P. Morgan Securities LLC and RBC Capital Markets LLC.

Proceeds will be used to purchase mortgage-backed securities and for general corporate purposes.

Magnum down on add-on

Houston-based oil and gas exploration company Magnum Hunter heralded a best-efforts offering of its 8% series D cumulative preferreds.

The company may sell up to $250 million of the preferreds.

Liquidation preference is $50.00 per share. The preferreds (NYSE: MHRPD) traded at $45.50 on Wednesday and were trading at $44.10, down $1.40, or 3.08%, as of Thursday's close.

There are currently 3.02 million of the series D preferreds outstanding.

Barclays, MLV & Co. Inc. and Wunderlich Securities Inc. are the joint bookrunning managers.

Any proceeds will be used for capital expenditures, working capital, acquisitions, the repayment or refinancing of debt, possible stock repurchases, investments in subsidiaries, a redemption of equity interests and/or general corporate purposes.

PS Business frees to trade

PS Business Parks' new $200 million issue of 5.75% series U cumulative perpetual preferreds freed to trade Thursday after pricing Wednesday.

A trader quoted the issue at $24.97 bid, $25.02 offered at midday.

After the bell, a market source said there was "pretty sizeable volume on that one," seeing about 540,000 preferreds change hands.

"For a deal that's not really that big, that's a lot," he said.

He said the issue closed at $24.90, but he noted that most trades were higher than that. The volume-weighted average price was $24.9666.

Pricing was originally talked around 5.875% but was revised to 5.75%. The deal was upsized from $100 million.

There is a $30 million over-allotment option.

The company will apply to list the new securities on the NYSE under the ticker symbol "PSBPU."

Bank of America Merrill Lynch, Morgan Stanley and Wells Fargo Securities LLC are the joint bookrunning managers.

Proceeds will be contributed to the company's operating partnership in exchange for preferred units of limited partnership that have substantially identical economic terms as the preferreds. The funds will be for general corporate purposes, including the redemption of all outstanding 6.7% series P cumulative preferreds on Oct. 9.

JPMorgan lists, fades

As was expected, JPMorgan Chase & Co.'s $1.1 billion issue of 5.5% series O noncumulative preferreds listed on the New York Stock Exchange.

The ticker symbol is "JPMPD." The issue priced Aug. 20.

Paper was trading at par as of midday.

However, by day's end, the preferred stock had "faded," according to a market source, due to reports of an escalating probe by a Senate committee regarding losing derivatives bets that resulted in losses of more than $5 billion for the New York-based bank.

The preferreds ended the day at $24.93, down from opening levels around $25.02.

SL Green slips, RBS climbs

SL Green Realty Corp.'s 7.625% series C cumulative redeemable preferreds (NYSE: SLGPC) were, "bizarrely," the day's most actively traded securities, according to a market source.

"It's probably one investor lightening up his position for whatever reason," he said.

The stock closed at $25.33, down 23 cents.

Royal Bank of Scotland Group plc's 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) were "finally" trading up, the source said.

"That issue has been lagging," he said, adding that the paper was "probably still undervalued."

The issue rose 8 cents to $22.82.

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