Morning Commentary: $25-par market rumbles; Capital One active; Energy Transfer gains

By James McCandless

San Antonio, Oct. 16 – The preferred space opened the session slightly positive with the Wells Fargo Hybrid & Preferred Securities Financial index up by 0.01%.

In the primary market, Aegon Funding Co. LLC priced a $925 million offering of $25-par tier 2 subordinated notes (Baa1/BBB) due Dec. 22, 2049 at par with a coupon of 5.1%.

BofA Securities, Inc., Morgan Stanley & Co. LLC, UBS Securities LLC, Wells Fargo Securities LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC are the joint bookrunners.

The notes are redeemable on or after Dec. 22, 2024. Prior to that, the notes are redeemable after a tax event, capital disqualification event or a rating methodology event.

Meanwhile, Bluerock Residential Growth REIT, Inc. announced plans to price an offering of up to $800 million series T redeemable preferred stock.

Up to $300 million of the $25-par preferreds are being offered through the company’s dividend reinvestment plan.

Bluerock Capital Markets, LLC is the dealer manager.

The preferreds are redeemable after three years at par. Prior to that, the preferreds are redeemable by the holders at par minus a redemption fee for five years, after the death of the holder or within 60 days after a change-of-control event at par.

Ellington Financial Inc. said that it plans to price an offering of $25-par series A fixed-to-floating rate cumulative redeemable preferred stock.

Morgan Stanley, UBS Securities, Keefe, Bruyette & Woods, Inc. and Sandler O’Neill & Partners, LP are the joint bookrunners.

The preferreds are redeemable after five years. Prior to that, the preferreds are redeemable within 120 days after a change of control.

Leading early secondary trading volume, Capital One Financial Corp.’s 5% series I fixed-rate non-cumulative perpetual preferred stock was active but unchanged so far.

The preferreds (NYSE: COFPrI) were level at $25.07 on volume of about 68,000 shares.

Elsewhere in the banking and finance space, Citigroup Capital XIII’s 7.875% fixed-to-floating rate trust preferred securities were declining.

The preferreds (NYSE: CPrN) were losing 5 cents to $27.65 with about 42,000 shares trading.

Sector peer JPMorgan Chase & Co.’s 5.75% series DD non-cumulative preferreds were higher early in the session.

The preferreds (NYSE: JPMPrD) were improving by 5 cents to $27.62 on volume of about 41,000 shares.

In the oil and gas sector, Energy Transfer Operating, LP’s 7.625% series D fixed-to-floating rate cumulative redeemable perpetual preferred units started Wednesday positive.

The preferreds (NYSE: ETPPrD) were better by 4 cents to $25.12 with about 54,000 shares trading.

Real estate investment trust American Homes 4 Rent’s 5.875% series G cumulative redeemable perpetual preferred shares started on the negative side.

The preferreds (NYSE: AMHPrG) were lower by 2 cents to $26.59 on volume of about 21,000 shares.

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