Morning Commentary: Preferred stock new issue calendar builds; DDR offering $25-par paper

By Stephanie N. Rotondo

Seattle, May 30 – A preferred stock trader speculated that the shortened holiday week would “probably see a couple of deals” on Tuesday.

To kick things off, DDR Corp. announced a $25-par offering, while CIT Group Inc. said it was selling a $1,000-par issue.

For its part, DDR is offering $100 million of class A cumulative redeemable preferred stock.

A trader said the deal could grow to $150 million, seeing the paper at $24.75 bid in the early gray market.

Price talk is 6.5% to 6.625%.

Wells Fargo Securities LLC, RBC Capital Markets, Stifel Nicolaus & Co. Inc. and UBS Securities LLC are running the books.

The Beachwood, Ohio-based real estate investment trust will use the proceeds to repay debt – including its 4.75% notes due 2018 – and for general corporate purposes.

Meanwhile, CIT Group will price an offering of up to $325 million of $1,000-par series A fixed-to-floating rate noncumulative perpetual preferred stock.

As of mid-morning, price talk was unavailable.

Morgan Stanley & Co. LLC, Barclays and Credit Suisse Securities (USA) LLC are the joint bookrunners.

Dividends will be fixed until June 15, 2022, at which point the rate begins to float at Libor plus a spread.

The notes become redeemable on June 15, 2022, or within 90 days of a regulatory capital treatment event. The redemption price is par plus accrued dividends.

Proceeds will be used for general corporate purposes, including returning capital to shareholders.

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