STAG Industrial on tap; ‘big deal’ could come soon; AmTrust, Legg Mason, BB&T eyed

By Christine Van Dusen

Atlanta, March 9 – STAG Industrial Inc. on Wednesday prepped a new issue of preferred stock as market-watchers awaited another deal – something “big,” according to market sources.

“I'm hearing a big deal is coming tomorrow – no industry or names, but it's going to be a large deal, so it's likely to be with a bank or insurance company,” a trader said.

The time is right, another trader said, because “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. 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 7¾% series E noncumulative perpetual preferred stock – hovered between $24.60 and $24.65 after being quoted in the gray market at $24.65 bid, $24.70 offered.

“I'm guessing that will probably stay in syndicate until tomorrow morning,” he 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, and RBC Capital Markets LLC, William Blair & Co., JMP Securities LLC and Compass Point are the co-managers.

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

Legg Mason sees activity

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.

“They’ve been moving up steadily,” a trader said.

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 at $25.00 a share, according to a company filing.

Dividends will be paid 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 stock 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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