PrivateBancorp prices $25-par debentures, called 'issue of the day'; Fifth Street sells notes

By Stephanie N. Rotondo

Phoenix, Oct. 11 - Preferred stocks were again higher Thursday, though a market source noted that prices were "not up much."

And, "for the market being up, it was not exactly a gangbuster day volume-wise." He speculated that people were "focused on other things," including earnings set to be released Friday from JPMorgan Chase & Co. and Wells Fargo & Co.

Two new issues were announced in the preferred market early session, with both pricing late in the day.

PrivateBancorp Inc. said it was selling $125 million of $25-par subordinated debentures due Oct. 30, 2042. A source said it was "the new issue of the day," as the paper was trading over par even before pricing.

Meanwhile, Fifth Street Finance Corp. announced an offering of $25-par senior notes due Oct. 30, 2024. The issue came at 5.875%, with $75 million of the notes being sold.

PrivateBancorp beats talk

PrivateBancorp brought $125 million of 7.125% $25-par subordinated debentures due 2042 on Thursday.

Price talk was 7.375% to 7.5%, a trader said. A source later reported that talk had been tightened to the 7.125% area, in line with where the offering priced.

"It's a really tiny deal," the trader said ahead of pricing, adding that he had heard it was "already put away."

The paper was trading at $25.10 in the gray market at midday.

"That's pretty high when it hasn't even priced," a source said, also seeing the paper at $25.10.

The first trader also noted that the company's 10% trust preferreds (Nasdaq: PVTBP) were selling off, as investors worried that the issue might not qualify for tier I capital anymore and that the paper might therefore be called.

"I don't think that's the issue, though," the trader said.

The TRUPs were down 26 cents to $26.01.

However, the trader also remarked that the "common [stock] is doing well because of this deal."

The straight equity (Nasdaq: PVTB) was up $1.33, or 8.35%, to $17.25 at midday. By the close, the equity was up only 95 cents, or 5.97%, to $16.87.

In addition to the notes, PrivateBancorp priced $75 million of stock after the close on Wednesday at $15.75 per share.

Joint bookrunners on the bonds are Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC.

Proceeds, along with funds from the stock sale, will be used to redeem $243.8 million of series B fixed rate cumulative preferreds that were issued to the U.S. Department of the Treasury under the Troubled Asset Relief Program.

Fifth Street sells notes

Fifth Street Finance announced and then priced a $75 million offering of 5.875% $25-par senior notes due 2024.

Early in the session, a trader said he hadn't seen any markets in the new issue. After the bell, a source said the paper had finally begun trading late in the day, moving as high as par before settling back in at $24.85.

UBS Securities LLC, Raymond James & Associates Inc., RBC Capital Markets LLC and Stifel Nicolaus & Co. Inc. are the joint bookunning managers.

Proceeds will be used to pay down debt facilities held by Wells Fargo and ING Groep, as well as other general corporate purposes, including working capital requirements.

Fifth Street is a New York-based specialty finance company.

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