Two Harbors markets deal; preferreds climb; Wells Fargo series J preferreds active

By Cristal Cody

Tupelo, Miss., Nov. 16 – Two Harbors Investment Corp. announced on Thursday plans to price series C fixed-to-floating-rate cumulative redeemable preferred stock.

Pricing action has been steady over the week in the preferred stock market from issuers including MB Financial, Inc. and Ladenburg Thalmann Financial Services Inc.

NuStar Energy LP also is expected to price series C fixed-to-floating rate cumulative redeemable perpetual preferred units.

“Given where rates and spreads are, this has been an issuers’ market, and they are just taking advantage of that, especially among non-rated entities,” an informed source said.

Preferred stocks improved on Thursday after ending mostly mixed over the first half of the week.

The Wells Fargo Hybrid and Preferred Securities index rose 24 basis points.

The U.S. iShares Preferred Stock ETF also closed up 24 bps.

Wells Fargo & Co.’s 8% series J non-cumulative perpetual class A preferred shares (NYSE: WFCPrJ) gained 37 cents, or 1.44%, to close at $25.98.

The “stock was heavily traded” as investors realized it would not be called on its first optional call date, a source said. The preferreds have a call date of Dec. 15, 2017.

Two Harbors to price

Two Harbors Investment is offering series C fixed-to-floating rate cumulative redeemable preferred stock, according to a prospectus filed with the Securities and Exchange Commission.

The coupon will have a fixed rate until Jan. 27, 2025, after which the rate will convert to a floating rate.

The liquidation preference is $25.00.

Morgan Stanley & Co. LLC, UBS Securities LLC, J.P. Morgan Securities LLC and RBC Capital Markets Corp. are the bookrunners. There is a 30-day over-allotment option.

The preferreds become redeemable on Jan. 27, 2025 at par plus accrued distributions.

Two Harbors is a New York-based real estate investment trust that invests in residential mortgage-backed securities, mortgage servicing rights, commercial real estate and other financial assets.

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