Morning Commentary: CAI launches $25 million preferred offering; Goldman Sachs active

By Abigail W. Adams

Portland, Me., March 21 – The primary market remains active in the preferreds space with another preferred offering launched prior to the market open.

CAI International, Inc. plans to price $25 million of $25-par perpetual series A fixed-to-floating rate cumulative redeemable preferred stock after the market close on Thursday with price talk for an initial dividend in the 8.5% area, according to a market source.

The deal size may be upsized and the pricing accelerated, depending on market demand, the source said.

The preferreds will carry a fixed dividend until April 15, 2023 when they will switch to a floating rate of Libor plus a to-be-determined spread, according to a 424B5 filing with the Securities and Exchange Commission. Dividends are payable quarterly.

The preferreds are freely callable at par after April 15, 2023. The preferreds are also redeemable upon a change-of-control event.

While trading volume has been light in the preferred space for much of the month, Goldman Sachs Group, Inc.’s depositary shares representing the company’s 5.5% series J fixed-to-floating rate non-cumulative preferred stock were active early in Wednesday’s session.

The depositary shares were down slightly in high-volume trading. They were seen at $26.62, a decrease of 3 cents or 0.11%, early in Wednesday’s session.

Less than two hours after the opening bell, the depositary shares had seen three times their average trading volume.

More than 315,000 preferreds were in play early in the session versus the three-month average of 100,000.

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