Hartford deal prices, goes 'gangbusters'; MFA hits market, performs poorly; Arch rises on call

By Stephanie N. Rotondo

Portland, Ore., April 3 - Preferred stocks ended Tuesday off their highs, a market source said.

"We were up slightly, but it eased off after the [Federal Reserve] minutes," he said. The high point of the day came just before the minutes were released, he added.

The story of the day was Hartford Financial Services Group, Inc.'s new 7.875% fixed-to-floating $25-par junior debentures due 2042, which came early in the session. When first announced on Monday, the new notes were instantly trading at or above par in the gray market, and that trend continued into Tuesday trading.

After the bell, MFA Financial Inc. priced its previously announced sale of 8% $25-par senior notes due 2042. Though the deal grew from its originally anticipated size, it was not doing so well in trading.

Meanwhile, Aspen Insurance Holdings Ltd. said it was planning a new issue of $25-par perpetual noncumulative preference shares. The preferreds priced after the bell. The new issue is the fifth to be announced in the last two days, and a trader said he was "still hearing we have a lot more issues in the pipes."

In secondary trading, Arch Capital Group Ltd.'s 7.875% series B noncumulative preferred shares dominated trading as investors reacted to news out late Monday that the company will redeem that issue, along with the 8% series A noncumulative preferred shares. The firm's recent issue of 6.75% series C noncumulative preferreds was also holding in well.

Hartford goes 'gangbusters'

Hartford Financial Services Group brought an offering of $600 million 7.875% fixed-to-floating-rate $25-par junior subordinated debentures due April 15, 2042 on Tuesday and the deal was already going "gangbusters," a market source said.

When the deal was first announced Monday, it was expected that the company would issue $500 million of notes. Ahead of pricing, the paper was already trading at levels at par or above.

After pricing and freeing to trade, the notes were quoted at $25.65 bid, $25.75 offered in the gray market, the source said.

Earlier in the session, a trader saw paper trading at $25.70.

The interest rate will be fixed until April 15, 2022. It will then be Libor plus 559.6 basis points. The floating rate will be reset quarterly.

Hartford will apply to list the notes on the New York Stock Exchange. Settlement is expected April 5.

Citigroup Global Markets Inc. and Goldman Sachs & Co. are the joint structuring advisers and bookrunning managers. Bank of America Merrill Lynch, Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are also acting as joint bookrunners. Credit Suisse Securities (USA) LLC, UBS Securities LLC, U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC are senior co-managers. BB&T Capital Markets, BNY Mellon Capital Markets, LLC, Lloyds Securities Inc., PNC Capital Markets LLC, RBS Securities Inc., SMBC Nikko Capital Markets Ltd. and Williams Capital Group, LP are junior co-managers.

Proceeds from the sale will be used toward a planned repurchase of 10% fixed-to-floating-rate junior subordinated debentures due 2068.

Hartford Financial is an insurance and financial services company based in Hartford, Conn.

MFA prices, does poorly

MFA Financial sold $100 million of 8% $25-par senior notes due April 15, 2042 on Tuesday, according to a market source.

Price talk was 8% to 8.125%, and the original size was expected to be at least $75 million.

But the deal "wasn't doing that well," one trader said.

The first source said the notes were offered at $24.58.

The company will apply to list the notes on the New York Stock Exchange under the ticker symbol "MFO." Settlement is expected April 11.

Morgan Stanley & Co. LLC, UBS and Wells Fargo are the joint bookrunning managers. RBC Capital Markets LLC, Cantor Fitzgerald & Co., Credit Suisse, Deutsche Bank, JPMorgan and JMP Securities are the co-managers.

Proceeds will be used to acquire mortgage-backed securities consistent with the firm's investment policy and for working capital, which may include the repayment of repurchase agreements.

MFA is a New York-based real estate investment trust engaged in the business of investing, on a leveraged basis, in residential agency and non-agency mortgage-backed securities.

Aspen prices

Aspen Insurance Holdings priced $150 million of 7.25% perpetual noncumulative preference shares after the market closed.

There is a $22.5 million greenshoe, according to a company news release.

Price talk was 7.25% to 7.75%, and the size was expected to be at least $100 million.

Before the bell, a trader said the preference shares were bid for at $24.80.

Aspen Insurance will apply to list the preference shares on the New York Stock Exchange under the ticker symbol "AHLPB."

Citigroup, Barclays, UBS and Wells Fargo are the joint bookrunning managers.

Proceeds will be used for general corporate purposes, including supporting insurance and reinsurance activities through operating subsidiaries, and for repurchasing ordinary shares from time to time.

Aspen Insurance is an insurance and reinsurance company based in Hamilton, Bermuda.

Arch up on redemption

Arch Capital's 7.875% series B noncumulative preferred shares were the dominant securities of the day as investors reacted to news the issue will be redeemed on May 1.

The preferreds (NYSE: ARHPB) earned 7 cents, ending at $25.42, with nearly 600,000 shares turning over.

The 8% series A preference shares (NYSE: ARHPA) were not nearly as active, with almost 281,000 shares changing hands. They closed up 6 cents at $25.42.

And Arch's recent $325 million issue of 6.75% series C noncumulative preference shares was holding up at $25.50, according to a trader.

Proceeds from the sale of the Cs will be used to fund the redemption.

Arch Capital is a Bermuda-based insurance and reinsurance company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.