Morning Commentary: Capitala launches baby bonds; Legacy Reserves’ 8% units free to trade

By Stephanie N. Rotondo

Phoenix, June 11 – New deals continued to enter the preferred stock market on Wednesday.

Capitala Finance Corp. said in a regulatory filing that it was selling at least $50 million of $25-par notes due June 2021. A trader said price talk was 7.125% to 7.25% and that the deal could grow to $100 million.

“It will probably price tomorrow,” he said.

Deutsche Bank Securities Inc., Keefe Bruyette & Woods and BB&T Capital Markets are the joint bookrunners. Janney Montgomery Scott LLC, Oppenheimer & Co., William Blair and Wunderlich Securities Inc. are the lead managers.

Co-managers are Ladenburg Thalmann & Co., J.J.B. Hilliard, W.L. Lyons, LLC and Sandler O’Neill + Partners LP.

Among recent deals, Legacy Reserves LP’s $175 million of 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units – a deal that priced Tuesday – freed to trade early Wednesday, according to a trader.

He saw the units trading at $24.70.

As for Capital One Financial Corp.’s $500 million of 6.25% series C fixed-rate noncumulative preferreds, that deal was being offered at $24.77, the trader said.

The issue came Monday and freed up on Tuesday.

Overall, the market continued to be soft.

The Wells Fargo Hybrid and Preferred Securities index was off 13 basis points shortly before noon ET.

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