Midday Commentary: Preferred space weak; new Integrys trades down; Reinsurance Group on tap

By Rebecca Melvin

New York, Aug. 19 - The preferred stock market remained weak early Monday as it has been for several weeks given the widening of spreads in the Treasury market, according to a preferred stock trader.

There are concerns about interest rates and yields in relation to other credit structures like municipal bonds, he said. "Everything has been hammered down."

First-day trading of Integrys saw that new paper trade down to about $23.19 by midday from a $25.00 par. That paper priced with a 6% yield.

Also in focus on Monday, Reinsurance Group of America Inc. said in a filed prospectus that it will price an offering of $1,000-par fixed-to-floating rate subordinated debentures due Sept. 15, 2053.

Price talk for the deal emerged during the session for at 7% to 7.125% yield, which was deemed "pretty attractive" by a trader.

The size of the deal was talked at $300 million, according to the trader.

BofA Merrill Lynch, J.P. Morgan Securities LLC and UBS Securities LLC are the joint bookrunning managers of the Reinsurance Group of America preferreds.

Through Sept. 15, 2023, interest payments will be made on a semiannual basis, and the rate will be fixed. Beginning Sept. 15, 2023, the debentures will begin to float at a rate of Libor plus a spread.

Interest will then be payable quarterly.

The debentures may be redeemed prior to Sept. 15, 2023 in whole within 90 days of a tax or rating agency event. After Sept. 15, 2023, the paper can be called at any time at par plus accrued interest.

Proceeds will be used for general corporate purposes.

Reinsurance Group of America is a Chesterfield, Mo.-based reinsurance company.

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