BB&T Corporation Joins the Preferred Stock Issuance Parade
By: Tim McPartland,
Financial services holding company BB&T Corporation (NYSE:BBT) joins the banking parade of companies in selling a new perpetual preferred stock offering. BB&T has sold a new 5.625% preferred stock offering and the new, investment grade shares now are trading on the OTC Grey Market under the temporary ticker BBTTP. In the 1st day of trading the shares traded in a range of $24.75 to $24.80.
As a financial services company, BB&T is required to issue non-cumulative preferred shares, so if its board of directors doesn’t declare dividends on the shares, the omitted dividend payments are gone forever. The 5.625% preferred shares are perpetual and thereby have no maturity date.
BB&T is issuing 17 million shares to raise $425,000,000, which will be used for general corporate purposes, for offering expenses and to provide a discount of $13 million to the issue’s underwriters.
The issue has a typical five-year optional redemption that allows the company’s management to redeem the shares at its discretion as early as June 1, 2021. Typically, the issuer will redeem the shares in what we call a “refinancing” transaction on the optional redemption date, if it can issue new shares at a coupon at least 0.25-0.50% below the coupon on the just-issued shares.
To compare this issue with other BB&T Corporation preferred issues outstanding, you can easily check them on our “swaps” page. The company has 4 other issues outstanding.
For those who are interested in buying shares on the OTC Grey Market, I invite you to check out our “primer” to gain an understanding of the process.