Midday Commentary: PrivateBancorp announces $25-par deal, trades over par in gray

By Stephanie N. Rotondo

Phoenix, Oct. 11 - Two new issues were announced in the preferred market early Thursday.

PrivateBancorp Inc. said it was selling $25-par subordinated debentures due Oct. 30, 2042.

Price talk is 7.375% to 7.5%, a trader said.

"It's a really tiny deal," the trader said, adding that he had heard it was "already put away."

The paper was trading at $25.10 in the gray market at midday.

The trader also noted that the company's 10% trust preferreds (Nasdaq: PVTBP) were selling off, as investors worried that the issue might not qualify for tier I capital anymore and that the paper might therefore be called.

"I don't think that's the issue, though," the trader said.

The TRUPs were down a quarter to $26.02 as of midday.

However, the trader also remarked that the "common [stock] is doing well because of this deal."

The straight equity (Nasdaq: PVTB) was up $1.33, or 8.35%, to $17.25.

PrivateBancorp priced $75 million of stock after the close on Wednesday at $15.75 per share.

Joint bookrunners on the new notes are Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC.

Proceeds will be used to redeem $243.8 million of series B fixed rate cumulative preferreds that were issued to the U.S. Department of the Treasury under the Troubled Asset Relief Program.

Meanwhile, Fifth Street Finance Corp. announced an offering of $25-par senior notes due Oct. 30, 2024.

A trader said he had not seen any markets for the new issue.

Interest will be paid quarterly. The notes become callable on Oct. 30, 2017.

Proceeds will be used to pay down debt facilities held by Wells Fargo and ING Groep, as well as for other general corporate purposes, including working capital requirements.

In recent deals, Discover Financial Services' new $500 million of 6.5% series B noncumulative perpetual preferreds was coming in slightly, but still performing well.

A trader quoted the issue - which priced Tuesday - at $25.40 bid, $25.50 offered.

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