Maiden Holdings' new issue frees; Capital One Financial's 6% series B preferreds list on NYSE

By Stephanie N. Rotondo

Phoenix, Aug. 23 - The preferred stock market was "taking a breather," a trader said Thursday.

While that meant generally subdued volumes, there was also an upside, the trader remarked.

"It gives retail some time to absorb all this inventory we've got out there," he said.

Another market source said the market ended the day "pretty flat," even with a "sizeable drop" in the last 10 to 15 minutes of trading.

Maiden Holdings Ltd.'s $150 million offering of 8.25% series A noncumulative perpetual preference shares freed to trade. The issue priced Wednesday after the close.

A trader said the paper was "doing well" on the break, which another source found "odd."

Meanwhile, Capital One Financial Corp.'s $875 million issue of 6% series B fixed-rate noncumulative perpetual preferreds listed on the New York Stock Exchange Thursday.

Maiden frees to trade

Maiden Holdings' new 8.25% series A noncumulative perpetual preferreds freed from the syndicate Thursday after pricing late Wednesday.

At midday, a trader said the issue was "doing well," seeing it trade at $25.10.

After the close, a market source said the bid for paper was $25.05, though he noted that "not a lot traded."

"That was very odd," he said of the paper's performance. He said it was "unusual" for a new issue to be trading at or above par on such little volume. He speculated that perhaps, "from an underwriter's perspective, it is a well-put-away deal into long-term hands."

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

Proceeds will be used for general corporate purposes, including possible common share buybacks or trust preferred redemptions.

Maiden is a Hamilton, Bermuda-based reinsurance holding company.

Capital One lists on NYSE

Capital One's 6% series B fixed-rate noncumulative perpetual preferreds listed on the NYSE Thursday under the ticker symbol "COFPP."

The preferreds were trading down 11 cents from the previous close at $24.84.

Since launching, the deal has struggled to hit par.

Capital One is McLean, Va.-based financial services company.

Heavy supply burdens investors

Capital One's most recent deal is not the only newly priced issue to have trouble hitting par.

New issues from JPMorgan Chase & Co., State Street Corp. and Wells Fargo & Co. have also faced headwinds in their attempts to reach - and hold - levels at or above par. A market source attributed the struggle to heavy supply.

From the beginning of 2012, he said, new issuance was expected to be high, though various market players disagreed on exactly how high. Based on how the calendar has gone thus far, in some cases issuance is well above expectations.

"Issuance is aggressive," the source said. "That's not likely to change in the near term."

Across the $25-par to $1,000-par markets, new preferred issuance for the year so far is $36.5 billion, the source pointed out. For all of 2011, new issuance was $18.4 billion.

"And we've still got four months to go," he said.

He added that the $25-par realm has "clearly been the favored market," with $27 billion of this year's issuance coming from that side of the arena. For a comparable period of 2011, $25-par issuance was a paltry $8.2 billion.

Though the new issuance is generally positive for the market, the heavier-than-expected supply might be more than investors can keep up with.

"There is certainly high demand interest, but supply is heavier than usual," the source said. "I don't really see that changing.

"The reduction we had in supply is over," he commented further, citing the "very favorable months, technically [speaking]" of June and July, when a lot of calls and redemptions occurred. "The bulk of that is over. The market is growing again."

New issues trading under par

JPMorgan's $1.1 billion of 5.5% series O noncumulative preferreds were briskly trading Thursday, moving up 6 cents to $24.92, according to a trader. The deal came Monday.

State Street's $500 million of series C preferreds that priced Aug. 14 were meantime down a dime at $24.90.

And Wells Fargo's $675 million issue of 5.2% class A noncumulative perpetual preferred stock, series N, (NYSE: WFCPN) were down a nickel at $24.91. That deal priced Aug. 9 and listed Aug. 17.

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