American Financial prices upsized $25-par debentures; CHS lists; Realty Income plans call

By Stephanie N. Rotondo

Phoenix, Sept. 16 – American Financial Group Inc. announced and priced an offering of $25-par subordinated debentures due 2054 on Tuesday.

The deal came upsized at $150 million – up from $100 million – at par to yield 6.25%.

Initial price talk was 6.25% to 6.375%, according to one market source.

“It was well-received,” a trader said.

The company’s existing notes were mixed on the news.

The 6.375% senior notes due 2042 (NYSE: AFW) were down in early trading but managed to turn positive by day’s end, closing up 14 cents at $25.70. The 7% senior notes due 2050 (NYSE: AFQ) were meantime weaker, ending down 9 cents to $26.17.

Both issues saw above-average trading on the day.

The Cincinnati-based insurance company said it could use proceeds from the offering to redeem some or all of the 7% notes, which become redeemable Sept. 30.

About $132 million of the securities are outstanding.

BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC are running the deal.

As for the rest of the week, one trader said he was “hearing of a couple more non-rated deals in the works.”

Overall, the preferred stock market finished Tuesday slightly firm after beginning the day with a slightly negative tone.

The Wells Fargo Hybrid and Preferred Securities index closed up 3 basis points. The index was down 2 bps at mid-morning.

The index started to tick higher just after lunchtime.

CHS lists on Nasdaq

A trader said CHS Inc.’s $475 million of 6.75% series 3 class B reset rate cumulative redeemable perpetual preferred stock was “moving up nicely” as the issue began trading on the Nasdaq Stock Exchange.

He saw the paper trading at $25.30 at mid-morning, though he noted that trades as high as $25.50 had occurred early in the session.

The shares closed at $25.20, which compared to opening levels around $25.05.

The deal came Sept. 8, upsized from an expected $250 million. The ticker symbol is “CHSCM.”

BofA Merrill Lynch and Wells Fargo Securities were the bookrunners.

Realty Income eyes redemption

Realty Income Corp. plans to redeem its 6.75% monthly income class E cumulative redeemable preferreds with proceeds from a $250 million offering of new notes, the company said Tuesday.

The preferreds (NYSE: OPE) closed down 55 cents, or 2.13%, at $25.23.

The Escondido, Calif.-based real estate investment trust plans to price senior notes due 2026 on Wednesday via Citigroup Global Markets Inc., BofA Merrill Lynch, BNY Mellon Capital Markets LLC, J.P. Morgan Securities LLC, RBC Capital Markets LLC, Regions Financial, U.S. Bancorp Investments Inc. and Wells Fargo Securities.

Paragon, Scorpio compared

A trader said Paragon Shipping Inc.’s $25 million of 8.375% senior notes due 2021 looked “very cheap” when compared to Scorpio Bulkers Inc.’s $65 million of 7.5% $25-par senior notes due 2019.

The Paragon issue came Aug. 8 and “just fell apart upon syndication,” the trader said.

Scorpio priced on Monday, coming twice upsized.

Paragon’s notes (Nasdaq: PRGNL) were trading at $21.88 on Tuesday, up 37 cents, or 1.72%. Scorpio’s notes were seen around $24.75.

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