MetLife sells $500 million preferreds; W.R. Berkley baby bonds lower; QTS, Compass list

By Abigail W. Adams

Portland, Me., March 20 – The preferred stock primary market remained active on Tuesday with one new deal pricing after the market close.

MetLife Inc. sold $500 million, or 500,000 shares, of $1,000-par perpetual series D fixed-to-floating rate non-cumulative preferred stock (Baa2/BBB/BBB) after the market close on Tuesday at par with an initial dividend of 5.875%, according to a FWP filing with the Securities and Exchange Commission.

Price talk had been for a benchmark-sized offering with a dividend in the 5.875% area, according to a market source.

The offering from MetLife is the second new deal of the week. W.R. Berkley Corp. priced an upsized $175 million of 5.7% subordinated debentures due 2058 (Baa3/BBB-/BBB-) at par of $25 after the market close on Monday.

W.R. Berkley’s 5.7% baby bonds were volatile during Tuesday’s session and at times traded well above their issue price. However, the new baby bonds closed the day down alongside the broader preferreds space.

The Wells Fargo Hybrid & Preferred Securities Financial index closed Tuesday down 0.17%. The U.S. iShares Preferred Stock ETF closed Tuesday down 0.29%.

“It’s not a good day to sell. There are no buyers,” a market source said.

QTS Realty Trust, Inc.’s recently priced 7.125% series A cumulative preferred stock and Compass Diversified Holdings’ recently priced 7.875% series B cumulative preferred stock are now listed for trade on the New York Stock Exchange.

QTS continues to trade above its $25-par issue price while Compass continues to struggle.

MetLife’s deal

MetLife priced $500 million of $1,000-par perpetual series D fixed-to-floating rate non-cumulative preferred stock (Baa2/BBB/BBB) after the market close on Tuesday at par with a dividend of 5.875%, according to an FWP filing with the SEC.

The deal was launched prior to the market open with price talk for a dividend in the 5.875% area, according to a market source.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, BofA Merrill Lynch and Wells Fargo Securities, LLC were joint bookrunners for the offering.

However, the deal was not very attractive and did not spark the interest of investors, a market source said. “It’s out there, but it’s not doing so great,” the source said.

W.R. Berkley’s deal

W.R. Berkley’s recently priced baby bonds were volatile on Tuesday, at times trading well above their $25-par issue price but closing the day below it.

W.R. Berkley priced an upsized $175 million of 5.7% subordinated debentures due 2058 (Baa3/BBB-/BBB-) at par of $25 after the market close on Monday.

Price talk had been for a coupon in the 5.75% area with the deal size initially $100 million, according to a market source.

The 5.7% notes due 2058 traded to a high of 25.626 and a low of 24.46 before closing the day at 24.92, according to Trace data.

Listing

QTS Realty’s 7.125% series A preferred stock is now listed for trade on the NYSE under the ticker “QTSPrA.”

The preferreds continue to trade above their issue price and are one of the few recent deals to perform well.

QTS closed Tuesday at $25.17, an increase of 7 cents or 0.28%.

Compass Diversified Holdings’ listing on the NYSE, however, did little to improve the position of its preferreds.

Compass’ 7.875% series B preferreds are now trading on the NYSE under the ticker “CODIPrB” where they continue to lose ground.

The preferreds closed Tuesday at $23.85, a decrease of 15 cents or 0.62%.

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