Market starts soft; Apollo Investment sells $25-par notes, comes upsized; Oxford Lane eyed

By Stephanie N. Rotondo

Phoenix, June 10 - It was "not a good day" for preferred stocks, a market source said Monday.

The source said that preferred securities were down an average of 26 basis points, or about 6.5 cents per $25-par issue. He said there was "nothing specific" to cause the dip, "other than the overall state of interest rates."

Two new issues were entering the preferred stock market as the week got underway on Monday.

Apollo Investment Corp. said it would sell at least $100 million of $25-par senior notes due 2043, with price talk between 6.875% and 7%.

The issue priced shortly before the close, with $135 million notes being sold at par to yield 6.875%.

Meanwhile, Oxford Lane Capital Corp. is planning an offering of at least $25 million series 2023 preferreds.

The securities are monthly paying. The issue did not price on Monday.

A trader said he had not seen any market for that issue, which was being talked around 7.5%.

As for deals that priced in the previous week, Allstate Corp.'s $250 million of 5.625% series A fixed-rate noncumulative preferreds were seen at par bid early in the session, while AmTrust Financial Services Inc.'s $115 million of 6.75% series A noncumulative perpetual preferreds were pegged at $24.43 bid, $24.50 offered.

Allstate priced on Wednesday, and AmTrust came on Tuesday.

Apollo prices, comes upsized

Apollo Investment sold an upsized offering of $135 million of 6.875% $25-par senior notes due 2043 on Monday.

Initial price talk was 6.875% to 7%, a trader said. The deal was originally expected to be around $100 million.

The trader saw the issue trading around $24.57 in the midday gray market.

After pricing, the trader quoted the issue at $24.60 bid, $24.62 offered.

Another market source pegged the notes at $24.70 to $24.75 bid, $24.80 offered, noting that the issue was trading lower during the day.

The New York-based closed-end, externally managed non-diversified management investment company will use funds raised in the offering to repay debt under a senior secured facility.

Off-the-runs active

Some of the day's most actively traded issues - that is, away from agency preferreds - were names that are not often seen at the top of the list.

Banco Santander SA's 10.5% series 10 noncumulative preferreds (NYSE: SANPE) were active, trading up 23 cents to $27.50.

The issue goes ex-dividend on Wednesday.

Regions Financial Corp.'s 6.375% series A noncumulative perpetual preferreds (NYSE: RFPA) were meantime also busy, but flat at $25.10.

And, Discover Financial Services Inc.'s 6.5% series B noncumulative preferreds (NYSE: DFSPB) dipped 4 cents to $25.56.

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