Morning Commentary: CAI prices upsized preferreds offering; preferreds rebound; Capital One gains

By Abigail W. Adams

Portland, Me., March 23 – The week ended with the pricing of a new preferred stock offering.

CAI International Inc. priced an upsized $40 million, or 1.6 million shares, of 8.5% series A fixed-to-floating rate cumulative redeemable preferred stock after the market close on Thursday at par of $25.00, according to a company news release.

Price talk had been for a dividend in the 8.5% area with the initial size launched at $25 million, according to a market source.

The preferreds will carry a fixed dividend of 8.5% until April 15, 2023 when they will switch to a floating rate of Libor plus 582 basis points. Dividends are payable quarterly.

Meanwhile, the preferreds space showed signs of a rebound as equity markets remained volatile.

The Wells Fargo Hybrid & Preferred Securities Financial index was up 0.05% early in Friday’s session after closing Thursday down 0.13%. The U.S. iShares Preferred Stock ETF was up 0.09% after closing Thursday down 0.32%.

As Capital One Financial Corp.’s common stock continued its decline on Friday, the McLean, Va.-based bank holding company’s depositary shares representing the 5.2% series G non-cumulative preferred stock saw gains.

The $25-par depositary shares traded up to $37.50, an increase of 3 cents or 0.08%, early in Friday’s session.

Capital One’s common stock was among the S&P 500’s biggest decliners in Thursday’s sell-off, dropping 3.6%. Capital One common stock continued to decline on Friday and was down another 1% early in the session.

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