Citigroup prices $1.5 billion preferreds; AmTrust Financial’s new issue frees to trade

By Stephanie N. Rotondo

Phoenix, March 13 – After the rush of new issues that hit the preferred stock market on Thursday, a trader said he “can’t believe it’s so quiet” in Friday trading.

That being said, he expected that the space would “keep seeing a slew of bank deals coming in the next week and the rest of the month.

“It appears that there is enough pent-up demand that everything is getting swallowed up.”

Supporting that opinion was the news that Citigroup Inc. was launching an offering of $1,000-par series O fixed-to-floating rate noncumulative preferreds on Friday.

The deal later priced at 5.875%, with $1.5 billion of the preferreds being offered.

Among the new deals priced Thursday, AmTrust Financial Services Inc.’s $165 million offering of 7.5% $25-par series D noncumulative preferreds freed from the syndicate at 10:30 a.m. ET on Friday.

As for the secondary market, it was deemed “soft” by a trader.

Judging by the Wells Fargo Hybrid and Preferred Securities index, that was indeed that case, as the index traded weaker for most of the session. However, it managed to finish the day up 1 basis point.

The index was down 11 bps at mid-morning.

Citigroup prices

Citigroup sold $1.5 billion of 5.875% $1,000-par series O fixed-to-floating rate noncumulative preferred stock on Friday.

Initial price talk was in the high-5% area, according to a trader.

Shortly after pricing, that trader quoted the issue at par bid, 100.25 offered. Another source pegged the preferreds at par bid, 100.125 offered.

The preferreds will be issued as depositary shares representing a 1/25th interest.

Citigroup Global Markets Inc. is the bookrunner.

Dividends will be fixed and payable on a semiannual basis until March 27, 2020, at which time the rate will float at Libor plus 405.9 bps and will be payable quarterly. Beginning on the reset date, the New York-based bank has the option to redeem the shares at par plus accrued dividends.

The company can also redeem the issue within 90 days of a regulatory capital treatment event.

The proceeds will be used for general corporate purposes, which may include funding operating units and subsidiaries, financing potential acquisitions or expansions and refinancing outstanding debt.

Elsewhere in the $1,000-par arena, Bank of America Corp.’s $1.9 billion offering of 6.1% $1,000-par series AA fixed-to-floating rate noncumulative preferred stock from Thursday was pegged around 100.5 early in the session, but fell to par bid, 100.25 offered by the close.

Morgan Stanley & Co. Inc.’s $1.5 billion of 5.5% series J fixed-to-floating rate noncumulative preferreds – another deal from Thursday – were meantime seen “right around” 100.625 bid, 100.75 offered at mid-morning.

That issue finished at 100.5 bid, 100.75 offered.

AmTrust frees

AmTrust Financial’s new $165 million issue of 7.5% series D noncumulative preferreds freed to trade around mid-morning, according to a trader.

After freeing, the trader saw the issue at $24.70 bid, $24.75 offered.

That same trader saw the issue quoted at $24.72 bid, $24.77 offered in the early gray market.

Morgan Stanley & Co. LLC, UBS Securities LLC and Keefe Bruyette & Woods Inc. were the bookrunning managers.

Dividends will be payable on the 15th day of March, June, September and December. The preferreds become redeemable on or after March 19, 2020 at par plus accrued dividends.

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures and/or strategic acquisitions.

AmTrust is a New York-based insurance company.

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