Morning Commentary: Cherry Hill makes second attempt to tap the market; Invesco comes back from par

By Stephanie N. Rotondo

Seattle, Aug. 10 – A familiar name was crossing the preferred stock tape on Thursday as Cherry Hill Mortgage Investment Corp. announced plans to sell series A cumulative redeemable preferreds.

Price talk is 8.25% on the inaugural issue, a market source reported.

A trader saw the issue at $24.60 bid in the gray market.

This isn’t the first time the Moorestown, N.J.-based real estate investment trust attempted to tap the preferred space. Back in December 2015, the company announced a similar deal, with price talk around 9% and the deal size slated to be $50 million. But within one day of announcing the new issue, Cherry Hill pulled it, citing unfavorable market conditions.

This go-round, Morgan Stanley & Co. LLC and RBC Capital Markets LLC are the joint bookrunners. Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the lead managers.

In the previous attempt, Morgan Stanley, UBS Securities LLC, Keefe, Bruyette & Woods Inc. and Citigroup were the joint bookrunning managers. Barclays, FBR Capital Markets & Co., JMP Securities LLC and Ladenburg Thalmann & Co. Inc. were the co-managers.

As for deals from Wednesday, Invesco Mortgage Capital Inc.’s $250 million of 7.5% fixed-to-floating rate series C cumulative redeemable preferred stock were pegged at $24.85 bid, $24.90 offered.

That was down from par in the previous session.

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

Morgan Stanley, BofA Merrill Lynch, UBS Securities and JPMorgan 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.

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