W.R. Berkley downsizes sale of $25-par subordinated notes; eBay notes free to trade

By Stephanie N. Rotondo

Seattle, Feb. 23 – The preferred stock space saw another new issue hitting the tape on Tuesday as W.R. Berkley Corp. announced a sale of $25-par subordinated debentures due 2056.

The new $100 million deal came at par to yield 5.9%. Originally, the issue was being talked in a 5.9% area with at least $150 million of the notes expected to be sold.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are running the books.

The Greenwich, Conn-based insurance company plans to use the proceeds for general corporate purposes.

Meanwhile, eBay Inc.’s $750 million of 6% $25-par notes due 2056 – a deal priced Monday – had freed to trade by mid-morning, according to a trader.

The paper was pegged at $24.82 bid, $24.90 offered.

That deal came upsized from $250 million. Initial price talk was in a 6.125% to 6.25% range but was later revised to 6%.

BofA Merrill Lynch, JPMorgan, Morgan Stanley and Wells Fargo also led that deal.

Away from new issues, the preferred stock market was following the broader markets downward in Tuesday trading, though the losses were stemmed a bit by day’s end.

The Wells Fargo Hybrid and Preferred Securities index finished down 5 basis points. The index was off 33 bps at mid-morning.

A trader noted that long Treasuries were weak on the day, as was oil.

“Consumer confidence numbers came in this morning and were worse than expected,” he said. However, home sales came in better than expected.

Fannie trades actively, lower

Fannie Mae’s preferreds were trading actively Tuesday, though there was no fresh news to act as a catalyst.

The GSE did report earnings on Friday, however.

The 6.75% series Q noncumulative preferreds (OTCBB: FNMAI) slipped a penny to $2.50. Over 5 million of the preferreds traded during the session, making the non-paying security the most active of the day, paying or not.

The 8.25% series S fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FNMAS) were also busy, with over 3 million shares being exchanged. That issue traded off 4 cents, or 1.33%, to $2.97.

Sector peer Freddie Mac saw its 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) trade down in lockstep with the latter Fannie issue, though overall volume was significantly less at about 426,000 shares trading.

On Friday, Fannie posted net income of $2.5 billion for the fourth quarter, up from $2 billion the year before. For the year, income came to $11 billion, down from $14.2 billion in 2014.

Fannie intends to make a $2.9 billion dividend payment to the Treasury Department, bringing its total returned to taxpayers to $147.6 billion.

The GSE received $116.1 billion in bailout funds in 2008.

Fannie’s earnings came on the heels of Freddie’s own quarterly results, which came out Thursday.

For the fourth quarter, Freddie reported a profit of $2.16 billion, which compared to a profit of $227 million the year before.

The mortgage giant attributed the surge in profit to higher credit performance and better derivative bets.

Freddie plans to make pay $1.7 billion of profits to the Treasury, bringing the total given back to taxpayers to more than $98 billion. The agency received more than $71 billion in bailout funding in 2008.

© 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.