No rest for primary as new deals from Aflac, AG Mortgage announced; Texas Capital nears par

By Stephanie N. Rotondo

Phoenix, Sept. 19 - The new issue market showed no signs of slowing down at midweek. The preferred stock market learned of two more deals slated to hit the tape.

Aflac Inc. said it will issue at least $250 million of $25-par subordinated debentures due 2052.

Price talk is around 5.5%, according to a trader.

"It should do pretty well, at least hang in there pretty well," another trader said. He said that the deal won't be priced "all that cheap," which could attract institutional investors, particularly funds and indexes.

Also, AG Mortgage Investment Trust Inc. said it will launch an issue of series B cumulative redeemable perpetual preferreds.

A trader said he heard talk is around 8% but added that he had seen few other details or markets in the name.

"Nobody's trading it," he said, speculating that the deal might just be small enough as to be tied up in retail hands.

Another market source speculated that a lack of trading activity - and an inability to trade at higher levels - in the new issue realm was due to overwhelming supply.

"We've had so much new issuance in the $25-par market, especially recently," the source said. "The retail houses are just choking on it."

In recently priced deals, Texas Capital Bancshares Inc.'s $100 million of 6.5% $25-par subordinated notes due 2042 freed to trade around midday on Wednesday. The deal priced Tuesday.

And Annaly Capital Management Inc.'s recent $400 million offering of 7.5% series D cumulative preferreds officially listed on the New York Stock Exchange, as was expected.

Aflac plans bond sale

Aflac, a New York-based provider of supplemental health and life insurance, announced plans for a sale of $25-par bonds Wednesday.

The deal - which "launched, but did not price," according to a market source - was expected to do well initially, but it failed to gain traction throughout the session.

At midday, a trader said that trading in the issue was "not that active," seeing it at $24.75 bid, $24.80 offered in the gray market.

After the bell, a source pegged the paper at $24.70 bid, $24.75 offered.

"It's not doing so well," the source said. He said that at first, some investors were excited because it was a different name, one not usually seen in the preferred realm. But that enthusiasm waned, which he said was simply due to an overabundance of supply across the new issue market.

"All new issues are not doing well," he said.

He added that at launch, the issue was slated to be $450 million in size with a 5.5% coupon.

Morgan Stanley & Co. LLC, Goldman Sachs & Co., J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

Proceeds will be used for general corporate purposes.

Texas Capital nears par

A trader was surprised that Texas Capital's new 6.5% $25-par notes were "really, really inactive." The deal priced Tuesday and freed up Wednesday.

"I barely see anything," he said. "I'm not sure why. Maybe it's a small enough deal that nobody is following it."

The trader also remarked that he liked the credit.

"They're a really clean bank," he said. "They've been performing well. They didn't get dinged that bad in the downturn."

He quoted the issue at $24.90 bid, $24.97 offered at midday.

At the close, a source said the paper ended at par, though he didn't think that level was indicative of the actual price. The high for the day, he said, was $25.30, with a low of $24.71. The volume-weighted average price was $24.71.

Annaly lists on NYSE

Annaly Capital's 7.5% series D preferreds listed on the NYSE Wednesday and were also among the day's most actively traded securities.

The ticker symbol is "NLYPD." The deal priced Sept. 6.

The preferreds were trading at $25.05, down 5 cents, at midday. At the close, the issue had traded down 8 cents to $25.02.

Torchmark over par, Argo below

Meanwhile, Torchmark Corp.'s new 5.875% $25-par junior subordinated debentures due 2052 were seen at $25.05 bid as of midday, according to a trader.

The $125 million deal priced Monday.

Argo Group US Inc.'s $125 million of 6.5% $25-par senior notes due 2042 were trading at $24.70 in midafternoon trading.

Argo priced Tuesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.