SunTrust Banks sells $500 million 5.625% $1,000-par preferreds; American Realty rebounds

By Stephanie N. Rotondo

Phoenix, Nov. 4 – Preferred stocks finished the day firm in Tuesday trading as SunTrust Banks Inc. brought a new $1,000-par deal.

The Wells Fargo Hybrid and Preferred Securities index closed up 15 basis points.

Atlanta-based SunTrust launched an offering of $1,000-par series F fixed-to-floating rate noncumulative preferred stock early in the day. Pricing came later, with $500 million of the preferreds being sold at par with an initial dividend of 5.625%.

A trader said price talk was 5.75% to 5.875%.

After pricing, a market source placed the issue at 100.25.

The dividend will be fixed until Dec. 15, 2019 and will be payable on a semiannual basis. After that date, the dividend will float at Libor plus 386 basis points and will be paid on the 15th day of March, June, September and December.

Goldman Sachs & Co., Morgan Stanley & Co. LLC and SunTrust Robinson Humphrey Inc. are running the books.

Meanwhile, Gladstone Investment Corp.’s proposed offering of series B cumulative term preferreds – a monthly paying issue announced Monday – was seen with a $24.55 gray market bid.

“I think it’s just a retail piece,” a trader said.

The deal has yet to price.

Janney Montgomery Scott LLC is the bookrunner.

In recent deals, Capital One Financial Corp.’s $500 million of 6.7% series D fixed-rate noncumulative perpetual preferreds – a deal from Oct. 28 – was “still hanging around” a $25.15 to $25.20 range, according to a trader.

The preferreds closed the day at $25.15, up 5 cents from the previous close.

The recent new issue is slated to begin trading on the New York Stock Exchange on Wednesday under the ticker symbol “COFPD.”

Among the company’s other preferred issues, the 6.25% series C noncumulative perpetual preferreds (NYSE: COFPC) rose 13 cents to $24.54, while the 6% series B noncumulative perpetual preferreds (NYSE: COFPP) ended up 12 cents at $24.24.

American Realty rebounds

American Realty Capital Properties Inc.’s 6.7% series F cumulative redeemable preferred stock (Nasdaq: ARCPP) recovered some of the ground lost since last Wednesday, though there was no fresh news driving the name higher.

The preferreds ended the day up 41 cents, or 1.96%, at $21.32.

The preferreds have been trending toward the down side since Wednesday when the company disclosed that its financial results dating back to 2013 could not be relied upon and that the Securities and Exchange Commission had launched an investigation into accounting irregularities.

On the heels of that news, the company also disclosed that chief financial officer Brian Block and chief accounting officer Lisa McAlister had resigned from their posts.

On Monday, the news got even worse as RCS Capital Corp. said it was calling off its $700 million buyout of American Realty’s Cole Capital Partners. In a statement released early Monday, American Realty said it had received word of the deal’s cancellation “in the middle of the night.”

“As we informed RCS orally and in writing over the weekend, RCS has no right and there is absolutely no basis for RCS to terminate the agreement,” the company said. “Therefore, RCS’s attempt to terminate the agreement constitutes a breach of the agreement. In addition, we believe that RCS's unilateral public announcement is a violation of its agreement with ARCP.”

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