Gladstone adds deal to calendar; Carlyle units busy, better; Georgia Power does ‘fine’

By Stephanie N. Rotondo

Seattle, Sept. 19 – New issues continued to trickle into the preferred stock market on Tuesday.

Gladstone Capital Corp. announced an underwritten public offering of series 2024 term preferreds early in the session. The company plans to use the proceeds to redeem its outstanding 6.75% series 2021 term preferred shares (Nasdaq: GLADO).

The existing issue was off 29 cents, or 1.14%, at $25.02, in well above-average trading.

Pricing details were not available as of 6 p.m. ET.

Janney Montgomery Scott LLC and Ladenburg Thalmann & Co. Inc. are running the books.

Dividends will be payable monthly. The preferreds become redeemable in 2019 or upon a change of control, at par plus accrued dividends. The company may also redeem some of the issue in order to maintain its asset coverage ratio.

The new securities will be listed on the Nasdaq Global Select Market under the ticker symbol “GLADN.”

Among other Nasdaq-listed issues, the Carlyle Group’s $400 million of 5.875% series A perpetual preferred units (Nasdaq: TCGP) were on the move, trading up 17 cents to $25.25.

The issue was one of the day’s more actively traded securities, with over 967,000 shares being exchanged.

The deal priced Sept. 6. There was no fresh news out to cause the movements.

As for Monday’s deals, Georgia Power Co.’s $270 million of 5% $25-par series 2017A junior subordinated notes due 2077 “did fine,” a market source said.

The source said the issue traded around $25.12 for most of the day.

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

Proceeds will be used to repay all or a portion of the company’s $45 million of 6 1/8% class A preferred stock at $25.00 per share and $225 million of its 6.5% series 2007A preference stock at par per share. Any remaining proceeds will be used for general corporate purposes.

Fannie, Freddie weaken

Fannie Mae and Freddie Mac were under pressure in active trading yet again on Tuesday.

Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) fell 9 cents, or 1.30%, to $6.81. About 4.87 million of the preferreds traded during the session.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were meantime off 7 cents at $6.97. Over 5 million of those preferreds were exchanged.

Last week, Democratic senators wrote a letter to the Federal Housing Finance Agency head, Mel Watt, to urge that the overseer of the GSEs allow the agencies to rebuild their capital coffers, which are set to fall to zero by 2018.

For his part, Watt has previously said that, under the current terms of the bailout agreement between Fannie, Freddie and the Treasury Department, the GSEs could need up to $100 million more in bailout funding in the next year or two.

Under the current terms, Fannie and Freddie pay out a majority of their quarterly profits as dividends to the Treasury. Both have paid back more than the amount they took in the financial crisis of 2009.

Also last week, Treasury secretary Steven Mnuchin said that reforming the GSEs would occur in 2018. However, Mnuchin – along with the Trump Administration as a whole – had previously promised that reform would come by August of 2017.

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