Argo Group to Sell Fixed Rate Reset Preferred

Insurance firm Argo Group International (ARGO) will be selling an issue of Resettable Fixed Rate preferred shares.

The issue will be non cumulative, but qualified.

The issue will have a fixed rate until 9/15/2025 after which it will be reset at the 5 year treasury plus a ‘spread’ (unknown as of this moment). It will then reset every 5 years.

‘Yield talk’ is in the 7 to 7.125% area.

The preliminary prospectus can be read here.

The company has 1 outstanding baby bond with a 6.50% coupon which can be seen here.

mcg was right on this one with EarlyBird chiming in.

5 thoughts on “Argo Group to Sell Fixed Rate Reset Preferred”

  1. Argo Prices Public Offering of $150 Million of Depositary Shares Representing Its Resettable Fixed Rate Perpetual Non-Cumulative Preference Shares https://seekingalpha.com/pr/17924363-argo-prices-public-offering-of-150-million-of-depositary-shares-representing-resettable-fixed
    HAMILTON, Bermuda–(BUSINESS WIRE)– Argo Group International Holdings, Ltd. (ARGO) (“Argo” or the “Company”), an underwriter of specialty insurance and reinsurance products, has priced an underwritten public offering of 6,000,000 Depositary Shares, each of which represents a 1/1000th interest in a share of the Company’s newly designated 7.00% Resettable Fixed Rate Perpetual Non-Cumulative Preference Shares, Series A (the “Preference Shares”). The Preference Shares have a liquidation preference of $25,000 per Preference Share, equivalent to $25 per Depositary Share (or $150 million in aggregate liquidation preference). The underwriters offered the Depositary Shares to the public at a public offering price of $25 per share.

    The offering was made pursuant to an effective shelf registration statement and is expected to close on July 9, 2020, subject to the satisfaction of customary closing conditions. Argo intends to use the net proceeds from the offering to repay its term loan, which has $125 million principal remaining outstanding, and for working capital to support continued growth in Argo’s insurance operations.

    The Preference Shares have no fixed maturity date. Argo may redeem all or a portion of the shares at a redemption price of $25,000 per Preference Share, equivalent to $25 per Depositary Share, on or after September 15, 2025. In addition, Argo may redeem shares prior to September 15, 2025 in certain other circumstances at applicable redemption prices. Argo intends to list the Depositary Shares on the New York Stock Exchange under the symbol “ARGOPrA.”

    The offering was led by Wells Fargo Securities, LLC, BofA Securities, Inc., Morgan Stanley & Co. LLC, UBS Securities LLC and J.P. Morgan Securities LLC, as joint book-running managers.

    “From and including the First Reset Date, dividends will be payable on a non-cumulative basis, with respect to each dividend period, only when, as and if declared by the Issuer’s board of directors or a duly authorized committee thereof, during each Reset Period, at a rate per annum equal to the Five-year U.S. Treasury Rate as of the most recent dividend determination date (as described in the preliminary prospectus supplement) plus 6.712% of the liquidation preference per annum.”

    1. Quantumonline has ARGD as BBB- so I assume these preferreds will be BB+. 7% seems like a solid yield for BB+. Similar to ESGRO.

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