MetLife prices $1.5 billion $1,000-par preferreds; First Republic Bank to list on NYSE

By Stephanie N. Rotondo

Phoenix, May 27 – The primary preferred stock market had a deal added to the calendar Wednesday, as MetLife Inc. announced – and then priced – a $1.5 billion offering of 5.25% $1,000-par series C fixed-to-floating rate noncumulative preferreds.

A trader said he believed price talk to be in the 5.375% area.

One market source saw the issue offered at 100.75 in late-afternoon trading.

Dividends will be fixed and payable semiannually through June 15, 2020. On that date, the dividend will begin to float at Libor plus 357.5 basis points and will be payable quarterly.

Proceeds from the deal – which came via Goldman Sachs & Co., BofA Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC – will be used to repurchase some or all of its outstanding 6.5% series B noncumulative preferreds (NYSE: METPB).

A trader said that ahead of that news, the Bs were trading at a negative yield to call and as such, “I am sure it’s going to get crushed.”

Sure enough, in Wednesday trades the issue was off 62 cents, or 2.4%, at $25.15.

The deal also points to an overarching trend currently in that market – that is, the prevalence of the $1,000-par issues.

With such issues being the latest craze in the market, a trader speculated that it was because “it probably saves a lot of money to the underwriter.” Such securities can be put away directly to institutional investors, allowing underwriters to get the deal done more quickly and thus cheaper.

But once that space gets “saturated,” $25-par issuance could pick up, the trader opined.

“We should be seeing some $25-par issues, because I know people are clamoring for it,” he said.

As for the secondary market, things were inching up a bit.

The Wells Fargo Hybrid and Preferred Securities index ended up 1 bp.

First Republic to list

Among recent $25-par deals, First Republic Bank’s $100 million of 5.7% series F noncumulative perpetual preferred stock will be admitted to the New York Stock Exchange on Thursday, according to a source.

The ticker symbol will be “FRCPC.”

The deal came May 19. On May 20, the issue was assigned a temporary trading symbol of “FREPP.”

In Wednesday trading, the preferreds were seen rising 4 cents to $24.74.

First Republic is a San Francisco-based private banking institution.

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