Valley National frees, deal deemed ‘on fire’; Annaly Capital active but lower; UMH lists

By Stephanie N. Rotondo

Seattle, July 28 – The preferred stock market was trying to finish the week on a firm note, based on readings of market indicators.

The Wells Fargo Hybrid and Preferred Securities index firmed 12 basis points, after being up 5 bps at mid-morning. The U.S. iShares Preferred Stock ETF ticked up 23 bps. It was up 3 bps earlier in the day.

Valley National Bancorp’s new $100 million of 5.5% series B fixed-to-floating rate noncumulative preferreds freed to trade in the early afternoon, trading under the temporary ticker “VLYYP.”

A market source said the deal was “on fire,” moving up to a $25.80 to $25.90 context by the end of the day.

“Just [shows] how that underwriter mispriced,” the source said. “That’s a lot of money that the issuer left on the table.

“Ouch,” he quipped. “But issuer’s loss is investor’s gain.”

The source also commented that the bank’s announcement early Thursday that it was adding a fixed-to-floating rate feature didn’t discourage investors.

“Not at that rate,” he said. “It was a sloppy job overall.”

Keefe Bruyette & Woods Inc. is the bookrunner.

The dividend rate will be fixed until Sept. 30, 2022, at which time it will float at Libor plus 357.8 bps.

The preferreds become redeemable on Sept. 30, 2022, or in whole within 90 days of a regulatory capital treatment event. In either case, the redemption price is par plus accrued dividends.

Of the week’s other new issues, Annaly Capital Management Inc.’s $700 million of 6.95% series F fixed-to-floating rate cumulative redeemable preferreds – a deal priced Tuesday – remained actively traded.

But while the market was slightly positive for the day, the new issue was trading off, losing 3 cents to trade at $24.82.

Over 1.4 million of the preferreds changed hands.

The deal freed Wednesday afternoon and began trading under a temporary ticker, “ANNPP.”

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, UBS Securities LLC, RBC Capital Markets, Citigroup Global Markets Inc. and Keefe Bruyette & Woods were the bookrunners.

The dividend rate will be fixed until Sept. 30, 2022, at which time it will float at Libor plus 499.3 bps.

Meanwhile, UMH Properties Inc.’s $125 million of 6.75% series C cumulative redeemable preferred stock were admitted to the New York Stock Exchange on Friday under the ticker symbol “UMHPrC.”

That issue firmed a penny to $25.17.

UMH priced on July 21 via BMO Capital Markets Corp. and Stifel Nicolaus & Co. Inc.

As for the more established secondary, the focus continued to be on GSE-linked paper.

Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were again weaker, sliding 29 cents, or 4.09%, to $6.81.

Nearly 3 million of the preferreds traded during the session.

Freddie Mac’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) meantime fell a quarter, or 3.67%, to $6.56.

The issue wasn’t as active as Fannie, trading over 726,000 times during the day.

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