Morning Commentary: American Financial, Markel to tap primary market; preferreds mixed

By Cristal Cody

Tupelo, Miss., May 21 – The preferred primary market continues to remain active on Thursday with new deals being marketed.

American Financial Group, Inc. plans to price $100 million of $25-par 40-year subordinated debentures (Baa2/BBB-) on Thursday.

Initial price talk is at the 5.75% area.

Also, Markel Corp. (Baa2/BBB/A-) is marketing series A fixed-rate reset non-cumulative preferred shares.

The rate will be reset on June 1, 2025.

The preferreds have a $1,000 per share liquidation preference.

The primary market has seen new issuance each day this week.

On Wednesday, First Horizon National Corp. priced $150 million of 6.5% $25-par perpetual non-cumulative preferred stock (Baa3/BBB).

The company sold 6 million depositary shares that represent 1/4,000th ownership interest in a share of the series E non-cumulative perpetual preferred stock.

The deal includes an over-allotment option of $22.5 million, or 900,000 depositary shares.

Comerica Inc. also priced $400 million of non-cumulative perpetual fixed-rate reset preferred stock tighter than guidance following fixed income investor calls on Wednesday.

Brighthouse Financial Inc. priced an upsized $350 million offering of $25-par 6.75% perpetual series B non-cumulative preferred stock on Monday, while Truist Financial Corp. brought an upsized $500 million of 5.25% perpetual non-cumulative preferred stock to the market on Tuesday.

Additional issuance is expected from Fortress Biotech, Inc., which began marketing an add-on to its 9.375% $25-par series A perpetual preferred stock on Tuesday.

Preferred stocks were mixed in mid-morning trading.

The Wells Fargo Hybrid and Preferred Securities index improved by 0.29%.

The U.S. iShares Preferred Stock ETF edged down 2 cents, or 0.04%, to $34.10.

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