American Capital prices offering of cumulative redeemable preferreds; recent deals eyed

By Stephanie N. Rotondo

Phoenix, May 5 - The preferred stock market was getting the week off to a strong start on Monday.

The Wells Fargo Hybrid and Preferred Securities index was up 17 basis points as of mid-morning. It climbed up to end 21 bps higher by the bell.

The market appeared to be little impacted by word that U.S. attorney general Eric Holder was considering laying down criminal charges against Credit Suisse and BNP Paribas.

BNP has been under investigation for violations involving working with countries that are currently under sanctions in the United States. Credit Suisse has been targeted for providing illegal tax shelters for Americans.

American Capital Agency Corp. brought a new deal to market, an offering of at least $100 million series B cumulative redeemable preferreds. Price talk was 7.75% to 7.875%, a trader said.

The trader also noted that there was no selling group, seeing a less 40-cent bid to $25.08 offered gray market quote.

"So that means there are not a lot of people in the deal," he said.

The deal eventually priced, coming upsized and at the tight end of talk; $175 million preferreds were sold at par to yield 7.75%.

Joint bookrunners are Morgan Stanley & Co. LLC and UBS Securities LLC. Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBC Capital Markets acted as joint lead managers.

But as the preferred arena awaited more new issues, investors were staying focused on recently priced deals from the Goldman Sachs Group Inc., Regions Financial Corp. and Morgan Stanley.

According to a market source, recent deals from those three issuers dominated the session.

Goldman's $700 million of 6.375% $25-par series K fixed-to-floating rate noncumulative perpetual preferred stock (NYSE: GSPK) was the busiest, with about 1.18 million shares trading.

The issue - which priced April 21 - closed down a penny at $25.55.

Regions' $500 million of 6.375% series B fixed-to-floating rate noncumulative perpetual preferred stock (NYSE: RFPB) - a deal that came April 24 - came in second, with about 628,000 shares exchanged. The preferreds ended the day up a penny at $24.96.

And, Morgan Stanley's $500 million of 6.625% $25-par series G noncumulative perpetual preferred stock (NYSE: MSPG) was up 2 cents at $25.08.

That issue priced April 22.

All three of those deals began trading on the New York Stock Exchange last week.

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