Prospect Capital prices $25-par notes; secondary market declines; Fannie, Freddie weaken

By Stephanie N. Rotondo

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

The company sold $150 million of the notes at par to yield 6.25%.

Price talk was 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.

A second source saw the issue at $24.65 bid, $24.70 offered post-pricing.

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

As for the secondary, a trader 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, but rebounded some by the end of the day, closing off just 14 bps.

Fannie Mae and Freddie Mac preferreds continued to lose ground, as has been the case for the past couple of weeks.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) weakened 17 cents, or 4.25%, to $3.83. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) dropped 8 cents, or 2.01%, to $3.90.

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