Raymond James' upsized $25-par notes go 'gangbusters'; Health Care REIT plans deal, does well

By Stephanie N. Rotondo

Portland, Ore., Feb. 29 - There was "definitely better liquidity" in the preferred stock market on Wednesday, a market source said, but "price movement wasn't so much" improved.

Two new deals were announced during the midweek session: A sale of senior notes by Raymond James Financial Inc. and an offering of cumulative redeemable preferreds by Health Care REIT Inc. The Raymond James deal priced and came upsized. According to one source, the deal was going "gangbusters."

The Health Care deal did not price, but it was still faring quite well in the gray market.

"People are definitely liking the two deals," a trader remarked.

Meanwhile, Inland Real Estate Corp. priced an add-on to its 8.125% series A cumulative redeemable preferreds. The preferreds came at a discount, but the paper was trading up by the end of the day.

"I think this could be the start of a really active new issue market," a trader speculated.

Raymond goes 'gangbusters'

Raymond James brought a $350 million offering of 6.9% $25-par senior notes due 2042 on Wednesday, according to a market source.

The company announced the deal earlier in the session, and a trader said about 8 million, or $200 million, of the notes were going to be issued, with pricing around 7%.

"It's one of the few issues they have brought out," a trader said, noting that it was trading "at a premium already."

He saw the notes trade around $25.02 in the gray market shortly before the close.

Another source noted that the deal's size was "fairly more than what they said they would do," adding that it was already "going gangbusters."

He quoted the issue at $25.08 bid, $25.15 offered after the close.

The St. Petersburg, Fla.-based financial services firm in fact does not do many deals. According to data compiled by Prospect News, the last time the company came to market was April 2011, when it sold $250 million of 4.25% $100-par senior notes due 2016. Before that, the company issued $300 million of 8.6% $100-par senior notes due 2019 in August 2009.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Raymond James & Associates Inc. are the joint bookrunners. The co-managers are Fifth Third Securities Inc., U.S. Bancorp Investments Inc., BB&T Capital Markets and BNY Mellon Capital Markets LLC.

Proceeds will be used to fund part of the company's acquisition of Morgan Keegan & Co. Inc.

Health Care deal does well

Toledo, Ohio-based real estate investment trust Health Care REIT heralded a plan to sell series J cumulative redeemable preferred stock on Wednesday.

A trader said price talk was originally around 7% but was revised to 6.5% to 6.625%. He quoted the issue at $24.90 bid, $24.95 offered in the gray market.

Another market source said the price talk was revised down from 6.625% to 6.75%. While it was not performing as well as the Raymond James deal, "it's still pretty good," the source said.

He pegged the paper at $24.95 bid, $25.02 offered in the gray market after the bell.

Proceeds will be used to redeem all of the company's 7.875% series D cumulative redeemable preferred stock. Remaining funds will be used for general corporate purposes.

The series D preferreds (NYSE: HCNPD) fell 53 cents, or 2.04%, to $25.50, though trading was light.

Health Care will apply to list the new preferreds on the New York Stock Exchange under the ticker symbol "HCNPJ."

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Investment Bank and Wells Fargo Securities LLC are the joint bookrunning managers.

Inland brings add-on

Inland Real Estate issued an additional $60 million of its 8.125% series A cumulative redeemable perpetual preferreds.

The company initially sold $50 million of the preferreds on Oct. 3.

The public offering price was $25.3906, a slight discount to Tuesday's closing price of $25.40, and resulted in an 8% yield.

The issue (NYSE: IRCPA) closed up 4 cents at $25.44 on Wednesday.

Settlement is expected Friday.

Wells Fargo is the bookrunning manager. The senior co-manager is Bank of America Merrill Lynch. KeyBanc Capital Markets Inc. is the co-manager, and Deutsche Bank Securities Inc. and Macquarie Capital (USA) Inc. are the junior co-managers.

Proceeds will be used for additional property purchases and for general corporate purposes, including the repayment of debt under the company's credit line.

Inland Real Estate is an Oak Brook, Ill.-based REIT.

© 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.