Primary market busy; Public Storage preferreds improve; Ally Financial declines

By James McCandless

San Antonio, June 17 – As the preferred primary space continued to be busy on Wednesday, the secondary saw top traders diverge.

In primary activity, Horizon Bancorp, Inc. priced a $60 million offering of $1,000-par fixed-to-floating rate subordinated notes due July 1, 2030 at par.

Also, First Midwest Bancorp, Inc. priced $110 million of $25-par 7% series C non-cumulative perpetual preferred stock at par.

Discover Financial Services price a $500 million offering of $1,000-par series D fixed-rate reset non-cumulative preferred stock with a dividend of 6.125%

Saratoga Investment Corp. priced a $37.5 million offering of $25-par fixed-rate notes due June 30, 2025 with a coupon of 7.25% at par.

Leading the pack, REIT Public Storage’s recent 4.625% series L cumulative preferred shares ended with an improvement.

Elsewhere, in the finance space, Ally Financial, Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities declined.

Sector peer United Community Banks, Inc.’s 6.875% series I non-cumulative preferreds were also under pressure.

Meanwhile, telecom giant AT&T, Inc.’s 4.75% series C perpetual preferred stock was lifted as the afternoon ended.

Retirement services provider Athene Holding Ltd.’s 6.375% series C fixed-rate reset perpetual non-cumulative preference shares dropped.

Horizon prices

In Wednesday primary activity, Horizon priced a $60 million offering of $1,000-par fixed-to-floating rate subordinated notes due July 1, 2030 (Kroll: BBB-) at par.

Keefe, Bruyette & Woods, Inc. is the bookrunner.

On July 1, 2025, the coupon converts to a floating rate of the three-month SOFR plus 549 basis points.

The notes are redeemable on or after July 1, 2025 at par. Prior to that, the notes are redeemable after a tax event, a tier 2 capital event, or if the company is required to register as an investment company.

First Midwest’s deal

Also, First Midwest announced that it priced $110 million of $25-par 7% series C non-cumulative perpetual preferred stock (Ba1/BB-) at par.

There is a $16.5 million greenshoe.

BofA Securities, Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Market, LLC, Wells Fargo Securities, LLC, Keefe, Bruyette & Woods, Inc. and Raymond James & Associates, Inc. are the bookrunners.

The preferreds are redeemable on or after Aug. 20, 2025 at par. Prior to that, the preferreds are redeemable within 90 days after a regulatory capital treatment event.

Discover prices

Discover priced a $500 million offering of $1,000-par series D fixed-rate reset non-cumulative preferred stock (Ba2/BB-/BB) with a dividend of 6.125% at par.

BofA Securities, Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC and Wells Fargo Securities, LLC are the bookrunners.

The dividend resets on Sept. 23, 2025 and every five years thereafter at a rate equal to Treasuries plus 578.3 bps.

The preferreds are redeemable within three months of each reset date. Prior to that, the preferreds are redeemable within 90 days after a regulatory capital treatment event at par.

Saratoga’s deal

Finishing off the day’s new issuance, Saratoga priced a $37.5 million offering of $25-par fixed-rate notes (Egan-Jones: BBB) due June 30, 2025 with a coupon of 7.25% at par.

There is a $5,625,000 greenshoe.

Ladenburg Thalmann & Co. Inc., Janney Montgomery Scott LLC, BB&T Capital Markets, B. Riley FBR, Inc. and Compass Point Research & Trading, LLC are the bookrunners.

The notes are redeemable on or after June 24, 2022.

Public Storage rises

Leading the pack of volume leaders, real estate investment trust Public Storage’s recent 4.625% series L cumulative preferred shares finished the day with an improvement.

The preferreds, trading under the temporary symbol “PUBXL,” were up 20 cents to close at $24.60 on volume of about 276,000 shares.

Ally down

Elsewhere, in the finance space, Ally Financial’s 8.125% series 2 fixed-to-floating rate trust preferred securities declined.

The preferreds (NYSE: ALLYPrA) shaved off 8 cents to close at $22.87 with about 256,000 shares.

Sector peer United Community’s 6.875% series I non-cumulative preferreds were also under pressure.

The preferreds (Nasdaq: UCBIO) shaved off 23 cents to close at $24.56 on volume of about 200,000 shares.

AT&T lifted

Meanwhile, telecom giant AT&T’s 4.75% series C perpetual preferred stock was lifted as the afternoon ended.

The preferreds (NYSE: TPrC) jumped up 19 cents to close at $23.64 with about 237,000 shares trading.

Athene drops

Retirement services provider Athene’s 6.375% series C fixed-rate reset perpetual non-cumulative preference shares dropped.

The preferreds (NYSE: ATHPrC) were pushed down 8 cents to close at $25.07 on volume of about 224,000 shares.

Indexes up

The Wells Fargo Hybrid & Preferred Securities Financial index closed up 0.21%, almost doubling a 0.11% rise from early Wednesday trading. The iShares US Preferred Stock ETF was up 4 cents to $35.04

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