First Republic prices upsized offering of $25-par preferreds; CIT brings $1,000-par issue

By Stephanie N. Rotondo

Seattle, May 31 – The preferred stock new issue pipeline continued to flow on Wednesday, as First Republic Bank brought $200 million of 5.125% series H noncumulative preferreds.

Price talk was 5.25%, a market source reported.

The deal was upsized from $150 million.

At the end of the day, a market source saw the issue quoted at $24.85 bid, $24.90 offered.

Earlier in the session, a trader noted that the deal was “small-ish, so it should be pretty tight.”

“I’m not seeing any offers yet, but I am sure it will do pretty well in the gray,” he added.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC ran the books.

The preferred stock offering came on the heels of a $500 million sale of 2.5% senior notes due 2022, which priced on Tuesday.

Proceeds from the preferred sale will be used, in part, to redeem the company’s 6.2% series B noncumulative preferreds (NYSE: FRCPrB). The redemption date is June 16.

Meanwhile, CIT Group Inc. priced its own preferred stock offering, coming with $325 million of 5.8% $1,000-par series A fixed-to-floating rate noncumulative preferreds.

A source pegged that paper at 101.875.

Ahead of pricing, a trader said that the deal officially launched early Wednesday with a price target of 6%.

The deal was first announced Tuesday. Morgan Stanley, Barclays and Credit Suisse Securities (USA) LLC were the joint bookrunners.

Dividends will be fixed until June 15, 2022, at which point the rate begins to float at Libor plus 397.2 basis points.

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.

As for deals that already priced, DDR Corp.’s $175 million of 6.375% class A cumulative redeemable preferred shares had freed to trade as of mid-morning.

The preferreds were seen at $24.98 bid, $25.05 offered. However, a trader had the issue at $25.05 bid, $25.15 offered at mid-morning.

The deal came Tuesday, tight to the 6.5% to 6.625% price talk and increased from an expected $100 million.

Wells Fargo, RBC Capital Markets, Stifel Nicolaus & Co. Inc. and UBS Securities led the deal.

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