Invesco prices tight to talk; KCAP brings baby bonds; Eagle Point lists; Kimco firms

By Stephanie N. Rotondo

Seattle, Aug. 9 – The preferred stock market’s new issue pipeline continued to flow on Wednesday.

Invesco Mortgage Capital Inc. kept the pipe churning with its offering of $250 million of 7.5% fixed-to-floating rate series C cumulative redeemable preferred stock.

The deal came at the tight end of the revised 7.5% to 7.625% price talk. Initially, price talk was 7.625%.

Ahead of pricing, a market source said the deal was at par in the gray market.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and J.P. Morgan Securities LLC ran the books.

Dividends will be fixed until Sept. 27, 2027. After that, the rate will float at Libor plus 528.9 basis points.

The preferreds also become redeemable on Sept. 27, 2027 at par plus accrued dividends. The issue can also be redeemed upon a change of control.

The Atlanta-based real estate investment trust plans to use proceeds for general corporate purposes.

Late Tuesday, KCAP Financial Inc. brought a $50 million offering of 6.125% $25-par notes due 2022 via Keefe Bruyette & Woods Inc., Janney Montgomery Scott LLC and Ladenburg Thalmann & Co. Inc.

Come Wednesday, the notes were seen closing at $24.88, though a source said the volume weighted average price of $24.77 was a “better indication.”

The notes become redeemable on Sept. 30, 2019.

Proceeds will be used for general corporate purposes.

Among other recent deals, Eagle Point Credit Co. Inc.’s $27.5 million of 6.75% $25-par notes due 2027 – a deal priced Aug. 1 – began trading on the New York Stock Exchange under the ticker symbol “ECCY.”

The notes rose 3 cents to $25.03.

Ladenburg Thalmann was the bookrunner. FBR Capital Markets & Co., Oppenheimer & Co. Inc. and National Securities Corp. acted as lead managers.

And, from Monday’s business, Kimco Realty Corp.’s $225 million of 5.125% class L cumulative redeemable preferreds were trading up, adding a nickel to finish the session at $24.60.

The issue freed to trade early Tuesday, trading under the temporary ticker “KIMRP.”

The new preferreds came tight to the 5.125% to 5.25% price talk. The size of the deal was upped from $150 million.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC ran the books.

The new and recent deals did better than the more established secondary market, which finished weaker on the day.

The Wells Fargo Hybrid and Preferred Securities index was down 16 bps at the close. The U.S. iShares Preferred Stock ETF was down 15 bps.

Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) followed along with the day’s downward trend, dropping 8 cents, or 1.13%, to $6.97.

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