PennyMac deal comes upsized, tight to talk; secondary slips

By Stephanie N. Rotondo

Seattle, June 27 – Talk of a new deal in the preferred stock market proved true Tuesday, as PennyMac Mortgage Investment Trust brought a $175 million offering of 8% series B fixed-to-floating rate cumulative redeemable preferreds.

The deal came at the tight end of the 8% to 8.125% price talk and was upsized from $75 million.

A trader saw the issue around $24.75 in the early gray market.

As for the company’s existing 8.125% series A fixed-to-floating rate cumulative redeemable preferreds (NYSE: PMTPrA), they were off 32 cents, or 1.24%, at $25.40.

Morgan Stanley & Co. LLC, Keefe, Bruyette & Woods Inc. and RBC Capital Markets are running the books.

The dividend rate will begin to float on June 15, 2024 at Libor plus 599 basis points. The paper also becomes redeemable on that date.

Proceeds will be used to fund the company’s business and its investment activities, to repay debt, to repurchase outstanding common stock through a $50 million share repurchase program and for other general corporate purposes.

Meanwhile secondary was trending lower along with the broader markets.

“Equity markets were down, Treasuries were down by over a point,” a source commented. “With both of them off, it would be nearly impossible for preferreds/hybrids to be up or even stay flat.”

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