Morning Commentary: Prospect Capital to sell $25-par notes due 2024; preferreds start session soft

By Stephanie N. Rotondo

Seattle, Dec. 3 – Prospect Capital Corp. added a new issue to the preferred stock pipeline Thursday, announcing an offering of $25-par notes due 2024.

Price talk is 6.25% to 6.375%, according to a market source.

“They are a very large [business development company],” he said. “They are always issuing stuff in the market, usually InterNotes out of Incapital.”

The source added that the last listed issue Prospect Capital had was 6.95% $25-par senior notes due 2022, which were called May 15.

“They will probably use [proceeds from the new deal] to take out whatever higher coupon issues they can,” the source said.

The source further remarked that the company is rated “right on the edge of junksville.”

He had not seen any markets for the paper in early trading.

UBS Securities LLC, BofA Merrill Lynch, Morgan Stanley & Co. LLC and RBC Capital Markets are running the books.

As for the secondary, the source said that “generally, we are seeing some red, with the bond market and stock market down, but nothing crazy.”

The Wells Fargo Hybrid and Preferred Securities index was off 31 basis points at mid-morning.

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