Morning Commentary: OFS sells $25-par notes; Franchise, Axos, Southern Co. on tap

By James McCandless

San Antonio, Sept. 15 – As the primary space continued to stay busy, the preferred secondary market had a positive tone with the Wells Fargo Hybrid & Preferred Securities Financial index opening up by 0.20%, though top traders varied.

Leading off the session’s primary activity, OFS Capital Corp. priced $25 million of $25-par notes due Sept. 20, 2023 (Egan-Jones: BBB-) with a coupon of 6.25%.

There is a $3.75 million greenshoe.

Ladenburg Thalmann & Co. Inc., Janney Montgomery Scott LLC, and National Securities Corp. are the bookrunners.

The notes are redeemable on or after Sept. 30, 2021 at par.

Also, Franchise Group, Inc. announced plans to price an offering of $25-par series A cumulative perpetual preferred stock.

B. Riley Securities, Inc., Incapital LLC, D.A. Davidson & Co., Janney Montgomery Scott, Ladenburg Thalmann and National Securities are the bookrunners.

The preferreds are redeemable after five years. Prior to that, the preferreds are redeemable within 90 days after a delisting event at par or 120 days after a change of control at par.

Separately, Southern Co. is in the market with an offering of $25-par series 2020C junior subordinated notes due Oct. 15, 2060, according to a 424B5 filing with the Securities and Exchange Commission.

The notes can be redeemed at par plus interest after Oct. 15, 2025.

Wells Fargo Securities, LLC is the global coordinator. Joining as joint bookrunners are BofA Securities Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and RBC Capital Markets Corp.

Axos Financial, Inc. plans to price an offering of $1,000-par fixed-to-floating rate subordinated notes due 2030.

Keefe, Bruyette & Woods, Inc. and Raymond James & Associates, Inc. are the bookrunners.

The coupon is fixed for five years, converting to a floating rate of the three-month SOFR plus a spread.

Moving along the top of the early Tuesday secondary, Brookfield Infrastructure Partners LP’s new $200 million 5.125% series 13 class A preferred limited partnership units were seen pushing past par on the morning of its first trading day.

The preferreds, trading under the temporary symbol “BIPPF,” were spotted at $25.11 on volume of about 223,000 shares.

Elsewhere, in the finance space, Wells Fargo & Co.’s 5.625% series Y and 4.75% series Z non-cumulative perpetual class A preferred shares were both being lifted.

The series Y preferreds (NYSE: WFCPrY) were up 7 cents to $26.50 with about 45,000 shares trading.

The series Z preferreds (NYSE: WFCPrZ) were gaining 7 cents to $25.01 with about 43,000 shares trading.

Sector peer Ally Financial, Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities were under pressure.

The preferreds (NYSE: ALLYPrA) were shedding 2 cents to $24.85 on volume of about 29,000 shares.

Real estate investment trust Digital Realty Trust, Inc.’s 5.875% series G cumulative redeemable preferreds were taking a dive.

The preferreds (NYSE: DLRPrG) were falling 83 cents to $25.04 with about 43,000 shares trading.

Meanwhile, utilities provider Duke Energy Corp.’s 5.75% series A cumulative redeemable perpetual preferred stock was also trailing.

The preferreds (NYSE: DUKPrA) were giving back 7 cents to $27.97 on volume of about 36,000 shares.

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