Capitala adds to calendar; GasLog’s new preference units free to trade; AmTrust falls

By Stephanie N. Rotondo

Seattle, May 9 – Expectations of a building preferred stock calendar were sated on Tuesday as Capitala Finance Corp. announced plans to sell $50 million of $25-par notes due 2022.

The chatter has been that at least a couple deals – likely from master limited partnerships and business development companies – would emerge this week. So far, the market has seen one issue from an MLP, with GasLog Partners LP pricing $125 million of 8.625% series A fixed-to-floating rate cumulative redeemable preference units late Monday. The Capitala deal satisfies the BDC side.

Ladenburg Thalmann & Co. Inc., BB&T Capital Markets, Janney Montgomery Scott LLC, William Blair & Co. LLC and Wunderlich Securities Inc. are running the books on the Capitala offering. Proceeds will be used to redeem a portion of the company’s $113.4 million of 7.125% $25-par fixed-rate notes due 2022 (NYSE: CLA).

The 7.125% notes traded up a nickel to $25.54 prior to the announcement. However, trading volume was less than average for the day.

Late Monday, the Charlotte, N.C.-based company reported its first-quarter earnings, showing net income of $4.9 million.

Earnings per share came to 31 cents, or 39 cents on an adjusted basis.

Revenue was $14.8 million.

Analysts polled by Zacks Investment Research had expected adjusted EPS of 39 cents on revenue of $16.2 million.

Meanwhile, the GasLog units freed to trade early in Tuesday trading.

A trader said the deal did well upon freeing, seeing the paper quoted in a par to $25.05 range.

“There wasn’t a lot put into weak hands,” he surmised.

Another market source saw the units closing at $25.05.

The deal came tight to the 8.75% talk and upsized from $50 million.

Morgan Stanley & Co. LLC, UBS Securities LLC, Stifel Nicolaus & Co. Inc. and Citigroup Global Markets Inc. ran the books.

The distribution rate will be fixed until June 15, 2027. After that, the rate will float at Libor plus 631 basis points.

As for the secondary, a trader said AmTrust Financial Services Inc.’s paper was “swinging around” after the company reported weak first-quarter results.

Overall, the preferred space ended with a weaker tone.

The Wells Fargo Hybrid and Preferred Securities index declined 7 bps. The U.S. iShares Preferred Stock ETF was down 21 bps.

AmTrust slides

AmTrust Financial’s preferreds were mostly lower on the day in the wake of the company’s poor earnings.

The 6.95% series F noncumulative preferreds (NYSE: AFSIPrF) were the most active of the AmTrust preferreds. While the issue initially traded down, it managed to finish the session slightly better, rising 2 cents to $21.77.

Though the rest of the preferred structure was down on the day, it did recover some ground. At mid-morning, the structure was down about 3% on average, but eventually finished off less than 1%.

For the first quarter, AmTrust posted a profit of $50.2 million, or 13 cents per share.

On an adjusted basis, EPS was 32 cents.

Revenue came to $1.43 billion. Adjusted revenue was $1.5 billion.

Analysts polled by Zacks had predicted adjusted EPS of 62 cents.

© 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.