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Morning Commentary: Annaly to price fixed-to-floating preferreds; Fannie, Freddie rising
By Stephanie N. Rotondo
Seattle, July 25 – A new issue was added to the preferred stock calendar early Tuesday as Annaly Capital Management Inc. announced a $200 million offering of series F fixed-to-floating rate cumulative redeemable preferreds.
Price talk is 7% to 7.125%, a market source reported.
At mid-morning, a trader saw the issue quoted at $24.85 bid, par offered in the gray market.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, UBS Securities LLC, RBC Capital Markets, Citigroup Global Markets Inc. and Keefe Bruyette & Woods Inc. are running the books.
The dividend rate will be fixed until Sept. 30, 2022, at which time it will float at Libor plus a spread.
The New York-based real estate investment trust plans to use the bulk of the proceeds to redeem its $185.3 million outstanding 7.875% series A cumulative redeemable preferreds (NYSE: NLYPrA).
That issue was down 55 cents, or 2.12%, at $25.40 in early dealings.
Away from the new issue, Fannie Mae and Freddie Mac’s preferreds continued to climb upward in active trading, though the preferred space as a whole continued to weaken.
Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 16 cents, or 2.34%, at $7.01, on over 766,000 shares traded as of mid-morning. The 8.25% series T noncumulative preferreds (OTCBB: FNMAT) were up a dime, or 1.52%, at $6.70, with over 107,000 shares traded.
Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were meantime up 15 cents, or 2.36%, at $6.50. Nearly 206,000 of the preferreds had been exchanged as of mid-morning.
For its part, the Wells Fargo Hybrid and Preferred Securities index was down 20 basis points in early trading. The U.S. iShares Preferred Stock ETF was off 19 bps.
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