Valley National plans new noncumulative issue; Annaly frees, dominates trading; GSEs firm

By Stephanie N. Rotondo

Seattle, July 26 – Another new preferred stock issue hit the tape on Wednesday as Valley National Bancorp announced a $75 million offering of series B noncumulative preferreds.

Price talk is 5.5%, according to a market source.

At the end of the day, the issue was quoted at $24.90 bid, $25.95 offered in the gray market. That compared to earlier quotes in a $24.78 to $24.92 context.

The deal had not priced as of 6 p.m. ET.

Keefe Bruyette & Woods Inc. is running the books.

The Wayne, N.J.-based bank holding company plans to use the proceeds for general corporate purposes and investments in Valley National Bank.

Also on Wednesday, Valley announced it was acquiring U.S. AmeriBancorp Inc. for $816 million.

The merger and the preferred offering are not contingent upon each other.

From Tuesday’s business, Annaly Capital Management Inc.’s $700 million of 6.95% series F fixed-to-floating rate cumulative redeemable preferreds were seen ending the day at $24.85.

“A lot of shares traded,” a market source said, noting that the deal’s size had something to do with that.

“It got to be a big deal,” he said, given that it was upsized from $200 million. “They did the deal fast and they grew it fast.”

Over 10.7 million of the preferreds were exchange during the midweek session.

The issue freed to trade at 11:45 a.m. ET, the source added. It was also assigned a temporary ticker, “ANNPP.”

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, UBS Securities LLC, RBC Capital Markets, Citigroup Global Markets Inc. and Keefe Bruyette & Woods were the bookrunners.

The dividend rate will be fixed until Sept. 30, 2022, at which time it will float at Libor plus 499.3 basis points.

The New York-based real estate investment trust plans to use a portion of the proceeds to redeem its $185.3 million outstanding 7.875% series A cumulative redeemable preferreds (NYSE: NLYPrA).

As for the secondary space, the market managed to finish with a firm tone after two days of losses.

The Wells Fargo Hybrid and Preferred Securities index was down 5 basis points. The U.S. iShares Preferred Stock index, however, was up 5 bps.

Fannie Mae and Freddie Mac’s preferreds continued to be among the most actively traded securities, as the paper remained on an upward course.

The Fannie 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 40 cents, or 5.63%, at $7.50. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were also up 40 cents, or 5.99%, at $7.08.

Entergy Louisiana LLC’s 4.875% $25-par collateral trust mortgage bonds due 2066 (NYSE: ELC) also got a piece of the action on Wednesday, even topping trading in the GSE-linked preferreds.

The “baby bonds” bucked the day’s upward trend, however, dipping 3 cents to $24.67.

There was no fresh news on the power provider.

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