Morning Commentary: Dynex on tap; Prospect Capital details offer; Legg Mason declines

By James McCandless

San Antonio, Aug. 5 – While top traders skewed weaker, the preferred space was seeing modest gains with the Wells Fargo Hybrid & Preferred Securities Financial index up by 0.02%.

In primary activity, Dynex Capital, Inc. announced plans to price an at-the-market offering of up to $50 million more of its 7.625% series B cumulative redeemable preferred stock and its 6.9% series C fixed-to-floating rate cumulative redeemable preferred stock.

Ladenburg Thalmann & Co. Inc. and JonesTrading Institutional Services LLC are the bookrunners.

For the series C preferreds, the dividend is fixed until April 15, 2025, then converts to a floating rate of the three-month Libor plus 546.1 basis points.

Both series of preferreds are redeemable on or after April 15, 2025 at par. Prior to that, the preferreds are redeemable within 120 days after a change of control.

Also, Prospect Capital Corp. offered more details on its multi-series $1 billion continuous $25-par preferred stock offering of up to 40 million shares with a dividend of 5.5%.

The company is offering 5.5% series A1 preferred stock, 5.5% series M1 preferred stock and 5.5% series M2 preferred stock.

Also part of the offering, the company is reclassifying 120 million shares of common stock as convertible preferred stock.

Preferred Capital Securities, LLC is the dealer manager.

Leading the secondary market, asset manager Legg Mason, Inc.’s 5.45% junior subordinated notes due 2056 were declining as the morning began.

The notes (NYSE: LMHB) were down 9 cents to $25.04 on volume of about 142,000 notes.

Meanwhile, telecom giant AT&T, Inc.’s 4.75% series C perpetual preferred stock was trailing early Wednesday.

The preferreds (NYSE: TPrC) were dipping 3 cents to $25.20 with about 72,000 shares trading.

Sector peer Qwest Corp.’s 6.5% notes due 2056 were pushing higher, following the morning’s trend.

The notes (NYSE: CTBB) were gaining 5 cents to $24.75 on volume of about 42,000 notes.

Elsewhere, in oil and gas, NuStar Logistics, LP’s 7.625% fixed-to-floating rate subordinated notes due 2043 were on the rise.

The notes (NYSE: NSS) were picking up 11 cents to $20.46 with about 38,000 notes trading.

In the finance space, Truist Financial Corp.’s new 4.75% series R non-cumulative perpetual preferred stock opened on the positive side.

The preferreds, trading under the temporary symbol “TSTFL,” were tacking on 1 cent to $25.36 on volume of about 37,000 shares.

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