AmTrust prices deal, older issues weaken; CHS preferreds free to trade; BofA to list

By Stephanie N. Rotondo

Phoenix, Sept. 9 – The primary preferred stock market got another deal added to the calendar Tuesday as AmTrust Financial Services Inc. announced an offering of at least $75 million series C noncumulative preferreds.

The deal priced after the close, coming upsized at $80 million at par to yield 7.625%.

Talk was 7.625% to 7.75%.

Morgan Stanley & Co. LLC, UBS Securities LLC and J.P. Morgan Securities LLC are the bookrunning managers.

A trader said he saw the issue around $24.65 in the early gray market.

“It put some selling pressure on the original two [preferred stock series],” the trader noted, deeming the preferreds down 30 cents to 40 cents.

The 6.75% series A noncumulative preferreds (NYSE: AFSIPA) ended down 52 cents, or 2.22%, to $22.93. The 7.25% series B noncumulative preferreds (NYSE: AFSIPB) were off 52 cents as well, or 2.11%, at $24.17.

Proceeds from the new issue will be used for general corporate purposes, which may include working capital, capital expenditures or strategic acquisitions.

Meanwhile, CHS Inc.’s new $475 million issue of 6.75% series 3 class B reset rate cumulative redeemable preferreds – a deal that priced late Monday, coming upsized from $250 million and at the tight end of talk – freed from the syndicate at 12:30 p.m. ET, according to a market source.

After the close, a source quoted the new issue at $24.86 bid, $24.91 offered. Shortly after the deal freed up, another source placed the preferreds at $24.89 bid, $24.92 offered.

The preferreds were pegged at $24.92 at mid-morning.

Overall, the preferred market was softer as Tuesday’s session began and got worse throughout the trading day.

The Wells Fargo Hybrid and Preferred Securities index finished down 24 basis points. At mid-morning, the index was down 13 bps.

Red Mountain nixed

Bank of America Corp.’s $1 billion of 6.625% series W noncumulative perpetual preferreds are slated to begin trading on the New York Stock Exchange on Wednesday, a market source told Prospect News.

The deal came a week ago, upsized from $250 million and at the tight end of talk.

The ticker symbol will be “BACPW.”

One source said the issue dominated trading on Tuesday, ending down just a shade at $24.849.

Earlier in the session, a trader had pegged the preferreds at $24.87 offered.

BofA Merrill Lynch brought the deal for the Charlotte, N.C.-based bank.

In other new issue news, Red Mountain Resources Inc. cancelled plans for a public offering of 10% series A cumulative redeemable preferreds.

The company said that the offering was contingent upon getting listing approval from the Nasdaq, but that its application was denied.

Calls to the company went unreturned on Tuesday.

The Dallas-based energy company said during an investor call on Aug. 18 that the deal was going well and that demand was more than it had expected. The company had originally planned to issue just $10 million of the preferreds but was considering growing it.

Among other recently priced deals, Invesco Mortgage Capital Inc.’s $150 million of 7.75% series B fixed-to-floating rate cumulative redeemable preferreds were trading at $24.72, a trader said.

Invesco priced Thursday.

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