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Morning Commentary: AmTrust offering noncumulative preferreds; National General improves
By Stephanie N. Rotondo
Phoenix, June 25 – The preferred stock market remained firm in early midweek trading, according to the Wells Fargo Hybrid and Preferred Securities index.
The index was up 7 basis points at midday.
In the primary, AmTrust Financial Services Inc. announced plans to sell at least $75 million of series B noncumulative perpetual preferreds.
Price talk is 7.25% to 7.375%.
A trader said the paper was trading around $24.62 in the early gray market.
The trader said he wasn’t all that surprised another insurance company came to market, even as National General Holdings Corp. failed to price the maximum amount of its 7.5% series A noncumulative preferreds last week.
National General has initially planned to sell $100 million of the preferreds but actually came with just $55 million.
“[AmTrust] is in growth mode and they don’t want to dilute the common,” the trader surmised. “Maybe you raise a little less, maybe you pay a little more, but you need the capital.”
The AmTrust deal is coming via Morgan Stanley & Co. LLC, UBS Securities LLC, Goldman Sachs & Co. and J.P. Morgan Securities LLC as the joint bookrunners. Keefe Bruyette & Woods Inc. is the lead manager. Co-managers are William Blair & Co., JMP Securities LLC, Sidoti & Co. LLC and Compass Point.
As for the National General issue, it has been steadily climbing higher this week. In early Wednesday trading, a trader pegged the issue at $24.90.
Meanwhile, Legacy Reserves LP’s $175 million of 8% series B fixed-to-floating rate cumulative redeemable preferred units began trading on the Nasdaq on Wednesday.
The ticker symbol is “LGCYO.” The deal came June 10.
Paper was trading at $24.93 at midday versus an opening level of $24.95.
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