W.R. Berkley prices upsized $175 million baby bonds; recent deals, broader market down

By Abigail W. Adams

Portland, Me., March 19 – While the secondary market in the preferreds space was down on Monday alongside broader equities, the primary market was active preparing a new baby bond offering.

W.R. Berkley Corp. priced an upsized $175 million of 5.7% subordinated debentures due 2058 (Baa3/BBB-/BBB-) at par of $25 after the market close Monday.

Price talk had been for a coupon in the 5.75% area with the deal size initially $100 million, according to a market source.

As equity markets struggled, so too did preferreds with market indicators reflecting losses.

The Wells Fargo Hybrid & Preferred Securities Financial index was down 0.15% at the market close Monday. The U.S. iShares Preferred Stock ETF was down 0.11%.

While trading volume remained light on Monday, Apollo Global Management LLC’s recently priced 6.375% $25-par series B non-cumulative perpetual preferred shares continued to see active trading.

After spending most of last week at par, the 6.375% preferreds closed Monday’s session below par.

New paper from TriState Capital Holdings Inc. was slow to trade early in Monday’s session. However, trading activity of the depositary shares representing the 6.75% perpetual fixed-to-floating rate series A non-cumulative preferred stock picked up later in the afternoon.

The depositary shares closed the day down, although they are still well above their issue price.

W.R. Berkley’s deal

The primary market kicked off the week with the pricing of a new investment-grade offering. W.R. Berkley priced an upsized $175 million of 5.7% subordinated debentures due 2058 at par of $25 after the market close Monday.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities, LLC are the bookrunners for the offering.

The deal was launched prior to the market open. Price talk had been for a coupon in the 5.75% area with the deal size initially $100 million, according to a market source.

While the offering was announced as $100 million there was room for it to be upsized depending on demand, the source said.

The coupon on the notes will be payable quarterly. However, there is an optional deferral period for up to five consecutive years. During the optional deferral period interest will accrue and will be compounded quarterly.

The notes from the Greenwich, Conn.-based insurance holding company will be listed for trade on the New York Stock Exchange under the ticker “WRBPrE.”

Apollo drops below par

After spending much of last week at par, Apollo Global’s 6.375% preferreds closed Monday at $24.92, a decrease of 8 cents or 0.32%.

The preferreds wavered between $24.90 and $25.00 during Monday’s session. While the broader preferred market continued to see light trading volume, Apollo Global’s 6.375% preferreds continue to be actively traded.

More than 563,000 shares were in play during Monday’s session.

Apollo priced $300 million, or 12 million shares, of the investment-grade preferreds after the market close on March 12.

TriState trades down

While new paper from TriState did not trade early in Monday’s session, activity picked up later in the afternoon.

TriState’s depositary shares closed Monday at $25.25, a decrease of 5 cents or 0.20%. The depositary shares wavered between $25.22 to $25.50 during Monday’s session.

TriState priced $35 million, or 1.4 million shares, of the 6.75% preferreds after the market close on Thursday.

The depositary shares from the Pittsburgh-based bank for middle market companies and commercial real estate entities freed for OTC market business on Friday under the temporary ticker “TSCLL.”

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