Affiliated Mangers, Merchants tap $25-par market; Brighthouse preferreds jump; DTE gains

By James McCandless

San Antonio, March 21 – A positive day in the preferred space served as the backdrop for two new primary deals.

Affiliated Managers Group Inc. priced $280 million of $25-par junior subordinated notes due March 30, 2059 at par with a coupon of 5.875%.

Also, Merchants Bancorp priced $50 million of $25-par series A fixed-to-floating rate non-cumulative perpetual preferred stock at par with an initial dividend of 7%.

Leading the secondary, Brighthouse Financial, Inc.’s new 6.6% series A non-cumulative preferred stock jumped higher.

Sector peer American International Group, Inc.’s 5.85% series A non-cumulative perpetual preferreds saw a slight gain.

In utilities, DTE Energy Co.’s 5.35% junior subordinated debentures due 2076 followed the positive path.

Real estate investment trust Two Harbors Investment Corp.’s 7.625% series B fixed-to-floating rate cumulative redeemable preferreds also closed better.

AGNC Investment Corp.’s 6.875% series D fixed-to-floating rate cumulative redeemable preferreds ended slightly better.

Affiliated Managers prices

Affiliated Managers priced $280 million of $25-par junior subordinated notes due March 30, 2059 at par with a coupon of 5.875%.

There is a $42 million greenshoe.

The offering was announced Thursday morning.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Wells Fargo Securities, LLC and RBC Capital Markets, LLC are the joint bookrunners.

The notes are redeemable on or after March 30, 2024 at par.

Merchants deal

Also on Thursday, Merchants Bancorp priced $50 million of $25-par series A fixed-to-floating rate non-cumulative perpetual preferred stock with an initial dividend of 7%.

There is a $7.5 million greenshoe.

The deal was announced on Friday.

Sandler O'Neill & Partners, LP is the bookrunner.

The notes are redeemable on or after April 1, 2024 at par. Prior to that, they are redeemable within 90 days after a regulatory capital treatment event.

The dividend is fixed until April 1, 2024, then converts to Libor plus 460.5 basis points.

Brighthouse better

Meanwhile, in the secondary market, Brighthouse’s new 6.6% series A non-cumulative preferred stock jumped higher by the end of the session.

The preferreds, trading under the temporary symbol “BHFLL,” gained 13 cents to close at $25.30 on volume of about 952,000 shares.

On Wednesday, the preferreds picked up 11 cents.

Sector peer AIG’s 5.85% series A non-cumulative perpetual preferreds closed slightly better.

The preferreds (NYSE: AIGPrA) added 5 cents to close at $25.27 with about 401,000 shares trading.

On Wednesday, the preferreds rose 3 cents.

DTE gains

Utilities name DTE Energy’s 5.35% junior subordinated debentures due 2076 finished the day positive.

The debentures (NYSE: DTJ) closed 4 cents higher to $24.98 on volume of about 442,000 debentures.

On Thursday, the company announced that it would refund about $27 million to customers it overcharged after state regulators overturned a rate hike imposed in 2017.

Two Harbors rises

Elsewhere, real estate investment trust Two Harbors’ 7.625% series B fixed-to-floating rate cumulative redeemable preferreds followed the prevailing path.

The preferreds (NYSE: TWOPrB) were up 17 cents to close at $25.31 with about 308,000 shares trading.

On Wednesday, the company issued common and preferred stock dividends, including for the series B preferreds.

AGNC, another REIT, saw its 6.875% series D fixed-to-floating rate cumulative redeemable preferreds end the day slightly better.

The preferreds (Nasdaq: AGNCM) picked up 2 cents to close at $25.04 on volume of about 272,000 shares.

Indexes up

By the Thursday close, the Wells Fargo Hybrid & Preferred Securities Financial index was up 0.03%, hovering around the 0.04% gain from early trading.

The iShares US Preferred Stock ETF was up 9 cents to $36.51.

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