Morning Commentary: Prospect Capital on tap; MetLife prices; Deutsche Bank preferreds tumble

By James McCandless

San Antonio, May 31 – Primary activity in the preferreds market picked up its pace as Prospect Capital Corp. announced an offering of baby bonds on Thursday a day after MetLife, Inc. tapped the market for an upsized $700 million of preferreds.

Prospect Capital said it plans to sell $25-par notes due 2028. The notes will be callable after three years.

Joint bookrunners are UBS Investment Bank, Morgan Stanley & Co. LLC and RBC Capital Markets LLC along with joint lead managers Citigroup Global Markets Inc. and Ladenburg Thalmann.

Prospect Capital is a New York-based asset management company.

The offering comes on the heels of MetLife’s upsized $700 million issue of 5.625% series E non-cumulative preferred stock, which priced on Wednesday.

There is a $105 million over-allotment option.

Morgan Stanley, BofA Merrill Lynch, UBS and Wells Fargo Securities LLC are the joint bookrunners.

The New York City-based insurance provider’s new preferreds are expected to list on the New York Stock Exchange under the symbol “METPrE.”

In the secondary market, Deutsche Bank AG’s 8.05% and 6.55% trust preferred securities started Thursday on top of preferred trading with about 349,000 and 221,000 shares trading, respectively.

The securities were tumbling amid reports that the Federal Reserve designated the bank’s American operations to be in “troubled condition” last year.

Recently, the company signaled that it would be laying off 7,000 employees worldwide.

The 8.05% securities (NYSE: DKT) fell 30 cents to $25.36.

The 6.55% securities (NYSE: DXB) fell 65 cents to $24.43.

Separately, Bank of America Corp.’s recent 6% series GG non-cumulative preferred stock remained active with about 158,000 shares changing hands in the secondary market.

The recent issue has routinely been one of the most actively traded preferred securities.

The preferreds (NYSE: BACPrB) were up 3 cents to $25.46.

The Wells Fargo Hybrid & Preferred Securities Financial index was down 0.10% in early trading, giving back most of the 0.16% gain seen on Wednesday.

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