Week's new issue supply expected to be heavy; Apollo prices new issue; PREIT planning deal

By Stephanie N. Rotondo

Phoenix, Oct. 1 - As the new month and final quarter of the year kicked off Monday, a preferred stock trader said he was hearing the week would be loaded with new issues.

Apollo Investment Corp. announced and priced a sale of $25-par senior notes due 2042. The deal ultimately came upsized and in the middle of price talk.

Pennsylvania Real Estate Investment Trust plans to price an issue of series B cumulative redeemable perpetual preferred stock.

In $100-par preferreds, CoBank ACB priced a $400 million issue.

Apollo deemed a pig

Apollo Investment brought $150 million of 6.625% $25-par senior notes due 2042.

The issue was trading at $24.63 in the gray market as of midday, a trader said ahead of pricing.

"I heard retail was snapping it up," he said.

Another source was not as optimistic about the deal.

"It's one of the biggest pigs of the market," he said, seeing a $24.60 bid, $24.65 offered market post-pricing. He noted that even when new issues trade weak, they are typically seen at bids of at least $24.65.

"It's not a well-known issuer," he said, adding that "the distribution channels are getting full, but supply isn't slowing down."

The deal was upsized from $100 million. Pricing was initially talked between 6.625% and 6.75%. It was then revised to 6.5% to 6.625%.

Bank of America Merrill Lynch and Morgan Stanley & Co. LLC are the joint bookrunning managers.

Proceeds will be used to repay debt under the company's senior credit facility.

Apollo Investment is a closed-end, internally managed, non-diversified management investment company based in New York.

PREIT to sell paper

Pennsylvania REIT intends to issue series B cumulative redeemable perpetual preferred stock.

That paper was seen at $24.60 in the gray at midafternoon. A trader said there is no selling group on the deal.

The issue did not price Monday.

Price talk is 7.5% to 7.625%, according to a trader.

The joint bookrunning managers are Wells Fargo Securities LLC, Citigroup Global Markets Inc. and Bank of America Merrill Lynch.

Proceeds will be used to repay amounts outstanding under the company's 2010 credit facility and for general corporate purposes.

The issuer is a Philadelphia-based REIT.

CoBank brings $100-par issue

CoBank priced a $400 million offering of 6.25% $100-par perpetual preferreds.

The paper was pegged at par bid by several market sources.

The preferreds (/BBB/BBB-) are non-callable for 10 years.

The deal will not be listed, a source said.

Bank of America Merrill Lynch and Morgan Stanley are the joint bookrunners.

Proceeds were expected to be used to fund the redemption of the company's series A and B $50-par preferreds. The Denver-based cooperative agriculture bank announced the call - which was set to occur Monday - on Aug. 24.

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