AmTrust Financial brings upsized new issue; Legg Mason notes free up; recent deals active

By Stephanie N. Rotondo

Seattle, March 8 – Yet another new issue hit the primary preferred stock calendar on Tuesday as AmTrust Financial Services Inc. brought $125 million of 7.75% series E noncumulative perpetual preferred stock.

Price talk was 7.75% to 7.875%, according to one market source. The deal came upsized from $75 million.

A trader saw the issue at $24.65 bid, $24.70 offered in the early gray market.

“That should pick up,” he said.

Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners. Keefe Bruyette & Woods Inc. is joint lead manager, and RBC Capital Markets LLC, William Blair & Co., JMP Securities LLC and Compass Point are the co-managers.

The New York-based financial services firm plans to use the proceeds for general corporate purposes.

From Monday’s business, Legg Mason Inc.’s $250 million of 6.375% $25-par junior subordinated notes due 2056 were initially pegged at $24.78 bid, $24.85 offered and seen closing at $24.82.

The closing price was up a penny from the previous day, a source said.

The issue also freed to trade during Tuesday’s session.

That deal was upsized from $150 million and came tighter than the 6.5% to 6.625% initial price talk.

As for deals priced last week, BB&T Corp.’s $425 million of 5.625% series H noncumulative perpetual preferreds – a deal priced Wednesday – dominated overall trading with more than 1 million shares being exchanged. The preferreds were quoted at $24.75 bid, $24.77 offered early in the day but eventually ended up 8 cents at $24.82.

Southern California Edison Co.’s SCE Trust V’s $300 million of 5.45% fixed-to-floating rate trust preference securities – a deal from March 1 –were seen at $25.50 bid, $25.57 offered.

And, Charles Schwab Corp.’s $750 million of 5.95% series D noncumulative perpetual preferreds were trading at $25.06 bid, $25.10 offered.

A source said Schwab’s preferreds closed at the offered side, up 3 cents.

That was the last deal of February, pricing on Leap Day.

“There’s a lot of these $25-par issues that retail needs to absorb,” a trader said. “All of these markets are pretty wide, which means” investors are hesitating. “They’re just sitting on the sidelines figuring out what to do.”

Deutsche Bank busy, mixed

A market source said that the “Deutsche Bank complex was pretty busy” during Tuesday trading.

“It’s been among the most active for the past month,” the source noted, as investors “assess and reassess” the bank’s fundamentals and then jockey around their positions.

The preferreds finished the day trending lower.

However, the most active of the structure, the 6.55% trust preferred securities (NYSE: DXB) closed up 3 cents at $23.18.

The 7.6% trust preferreds (NYSE: DTK) declined a similar amount to $24.17, while the 8.05% trust preferreds (NYSE: DKT) dropped 15 cents to $25.14.

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