Ladenburg, RAIT announce programs; recent deals stay busy; Citi faces lawsuit, shares slip

By Stephanie N. Rotondo

Phoenix, June 13 – The preferred stock new issue calendar took a breather Friday, though two new at-the-market programs were announced late in the day.

“I think we’ll see some more stuff come next week,” one trader opined.

Ladenburg Thalmann Financial Services Inc. said it was selling up to $75 million additional 8% series A cumulative redeemable preferreds (NYSE: LTSPA) in a continuous offering.

The issue ended the day off a penny at $22.07.

Mitsubishi UFJ Securities and Barrington Research are running the program.

Proceeds will be used to prepay notes from various lenders, including an affiliate of Dr. Frost, Vector Group Ltd. and an affiliate of Richard J. Lampen, president and chief executive officer. The notes were taken on to finance the company’s acquisition of Securities America.

Any remaining funds will be used for general corporate purposes.

And RAIT Financial Trust will sell up to $150 million of three series of preferreds in an “at-the-market” offering.

The three series included are the 7.75% series A cumulative redeemable preferred shares (NYSE: RASPA), the 8.375% series B cumulative redeemable preferred shares (NYSE: RASPB) and the 8.875% series C cumulative redeemable preferred shares (NYSE: RASPC).

MLV & Co. LLC will make the sales.

The secondary market gyrated a bit throughout the session but managed to eke out some gains by the end of business.

The Wells Fargo Hybrid and Preferred Securities index was up 2 basis points.

Recent deal tidbits

From Thursday’s business, Colony Financial Inc.’s $75 million of 7.5% series B cumulative redeemable preferreds had yet to free up as of early trading, according to a trader.

He saw the issue quoted at $24.60 bid, $24.65 offered.

Also from Thursday, Commerce Bancshares Inc.’s $150 million of 6% series B noncumulative perpetual preferreds had freed to trade.

The preferreds were pegged at $24.80 bid, $24.82 offered early in Friday trading.

As for Bank of America Corp.’s $1.5 billion issue of 5.125% $1,000-par series V fixed-to-floating rate noncumulative preferreds, a trader saw the deal at 99.125 bid, 99.5 offered.

As of Thursday’s close, the issue was at par bid, par 1/8 offered, a trader said.

“So they have pulled back a bit,” he said.

Meanwhile, Capitala Finance Corp.’s $100 million of 7.125% $25-par notes due 2021 were seen around $24.85.

A trader said he was hearing the notes had freed from the syndicate, but he had not seen any confirmation of that claim.

Going back to Tuesday business, Legacy Reserves LP’s $175 million of series B fixed-to-floating rate cumulative redeemable preferred units were trading around $24.65 on Friday.

Citigroup facing lawsuit

Citigroup Inc.’s preferreds were mostly weaker following news the U.S. government planned to sue the New York-based bank over allegedly faulty mortgage securities it sold.

However, the most liquid issues of the structure were mixed.

The 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPK) saw the most trading – over 1.8 million shares – and were down a penny at $26.78. The 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) traded about a third of that amount and gained 3 cents to close at $27.48.

The Department of Justice plans to file a lawsuit against Citigroup in regards to mortgage bonds the agency claims the bank sold ahead of the financial crisis. The bank allegedly sold the securities by fraudulently representing their quality.

The suit comes after negotiations on a settlement regarding the matter failed. The DOJ reportedly sought a settlement of $10 billion or more, while Citigroup offered less than $4 billion.

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