Preferreds down; CAI offering on tap; 1347 Property Insurance lists; NGL Energy up

By Abigail W. Adams

Portland, Me., March 22 – The preferreds secondary market was down alongside equity markets on Thursday as the primary market readies a new deal.

CAI International, Inc. planned to price $25 million of $25-par perpetual series A fixed-to-floating rate cumulative redeemable preferred stock after the market close on Thursday with price talk for an initial dividend in the 8.5% area.

The deal had not yet priced as of press time.

CAI’s offering is the second preferred stock offering of the week which also saw the pricing of a new baby bond deal.

W.R. Berkley Corp.’s recently priced 5.7% baby bonds again traded above par on Thursday but closed the day below their $25-par issue price.

As new paper enters the preferred space, the secondary market remains in the red, according to two market indicators.

The Wells Fargo Hybrid & Preferred Securities Financial index was down 0.08% shortly before noon ET and continued to see losses, closing Thursday down 0.13%. The U.S. iShares Preferred Stock ETF was down 0.16% shortly before noon ET and closed Thursday down 0.32%.

1347 Property Insurance Holdings Inc.’s recently priced 8% series A perpetual cumulative preferred stock is now listed for trade on the Nasdaq under the ticker “PIHPP.”

However, the listing did little to improve the status of the struggling preferreds.

While the broader market was down, NGL Energy Partners LP’s 9% class B fixed-to-floating rate cumulative preferred units saw large gains, breaking past their $25 liquidation preference and setting a new 52-week high.

W.R. Berkley’s baby bonds

W.R. Berkley’s 5.7% subordinated debentures due 2058 again traded above their $25 liquidation preference during Thursday’s session but closed the day below it. The 5.7% notes were seen trading up to $25.40 during Thursday’s session.

However, the notes closed the day at $24.83. W.R. Berkley 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.

1347 Property lists

1347 Property Insurance’s 8% series A cumulative preferreds are now trading on Nasdaq. However, the listing did little to improve the position of the struggling preferreds.

The 8% preferreds were seen at $24.25 bid early in Thursday’s session but ended at $24.40, down 20 cents or 0.81%.

1347 priced $16 million, or 640,000 shares, of the 8% series A perpetual cumulative preferred stock at $25.00 per share on Feb. 23.

While the preferreds traded up to par in early March, they have largely languished below their liquidation preference since hitting the market.

NGL Energy gains

NGL Energy’s 9% class B preferred units were volatile during Thursday’s session but closed the day with large gains.

The preferreds traded to a low of $23.78 but closed the day at a high of $25.56, an increase of $1.78, or 7.49%.

The closing price set a new 52-week high for the preferred units.

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