Interstate Power, Sabra Health price; Fannie, Freddie improve; Goldman, JPMorgan mixed

By Stephanie N. Rotondo

Phoenix, March 14 - The new issues kept coming on Thursday as Interstate Power & Light Co. and Sabra Health Care REIT Inc. announced plans for preferred stock offerings.

Interstate said it would issue a minimum of $100 million of series D cumulative perpetual preferreds. A trader said the deal would likely be upped to $150 million.

Price talk was 5.25% to 5.375%, he said.

"They'll probably push the yield to 5.125%," he added.

In fact, the yield was pushed to 5.1% and the sized increased to $200 million.

Sabra meantime said it would sell at least $50 million of series A cumulative redeemable preferreds.

That issue was being talked around 7.25%. After the bell, a trader said $125 million preferreds were being sold at 7.25%.

In the secondary, a trader said that Fannie Mae and Freddie Mac preferreds were on the rise during Thursday's session. The gains were attributed to an article in The Wall Street Journal that said a privatization of the mortgage firms would not be ideal, given that they are such "cash cows," the trader said.

He called the preferreds all up 30 cents to 40 cents in early trading. By the end of business, Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were up 32 cents, or 14.55%, to $2.52, while Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 32 cents, or 15.38%, at $2.40.

After the market closed for the day, news came out regarding the Federal Reserve's recent stress test-results. It was reported that Goldman Sachs & Co. and J.P. Morgan Chase & Co. were told to improve their capital plans, as the current ones were too weak.

Ahead of that news, both companies' preferreds were mixed in trading.

Interstate Power does well

Interstate Power & Light brought $200 million of 5.1% series D cumulative perpetual preferreds on Thursday.

The deal was increased from $100 million, and pricing was tightened from a 5.25% to 5.375% context.

Ahead of pricing, a trader said the issue was "trading well," seeing a $24.92 bid, par offered quote in the midday gray market.

Post-pricing, he placed the issue at $24.90 bid.

Another trader noted that it was a "very interesting name," seeing a "par-plus" bid for paper.

Proceeds from the new issue will be used to redeem the Cedar Rapids, Iowa-based utility's 8.375% series B cumulative preferreds (NYSE: IPLPB).

Those shares ended the day unchanged at $25.03.

Sabra deal upsized

A trader reported that Sabra Health Care REIT had priced a $125 million offering of 7.25% series A cumulative redeemable preferreds.

The deal was increased from $50 million but came in line with price talk.

Early in the day's session, a trader had noted that there was no selling group on the day. He pegged the midday gray market at $24.70 bid, $24.80 offered.

The first trader placed the issue at $24.75 post-pricing.

Proceeds will be contributed to the operating partnership, which will use the funds to repay outstanding amounts under an amended secured revolving credit facility. Any remaining funds will be used for future acquisitions or general corporate purposes.

Sabra is an Irvine, Calif.-based real estate investment trust.

Goldman, JPMorgan mixed

After the bell, the Federal Reserve announced that it was requiring Goldman Sachs and J.P. Morgan Chase to improve their capital plans, as a recent round of stress tests showed their current plans to be lacking.

Before that news came out, the banks' preferreds were mixed in trading.

Goldman's floating-rate series D noncumulative preferreds (NYSE: GSPD) were down a nickel at $22.87, while the 5.95% series I noncumulative preferreds (NYSE: GSPI) were flat at $25.10.

JPMorgan's 5.5% series O noncumulative preferreds (NYSE: JPMPD) meantime dipped 2 cents to $25.08 and the 5.45% series P noncumulative preferreds (NYSE: JPMPA) rose a penny to $24.93.

The Fed said the new plans were to be submitted by the end of September. The central bank also said that it would approve recent requests to increase dividends and to buy back stock.

Similar requests from Ally Financial Inc. and BB&T Corp. were denied.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.