Bankers Trust New York Corp.'s exchange offer for up to $150 million of outstanding preferred is likely to hit the market later this month.
Bankers Trust will offer new preferred stock in exchange for the higher-cost outstanding shares.
The dividend yield on the new preferred will likely be 1.5 to 2 percentage points lower than the 8.72% the corporation pays on its series D cumulative preferred stock, the issue being replaced, an investment banker said.
From an investox's point of view, an advantage is that the new securities will not be callable for three years, while the issue being replaced is redeemable now at $51.50 a share.
Bankers Trust joins several banks that have taken advantage of falling interest rates this year to refinance higher-cost capital. Chemical Banking Corp. and Chase Manhattan Corp. refinanced adjustable-rate preferred stock, and SunTrust Banks Inc. refinanced high-coupon subordinated debt.
First Chicago Corp. filed with the Securities and Exchange Commission last week to issue $300 million of preferred stock, and market sources say Chemical is expected to launch a $150 million issue of preferred next week through Lehman Brothers. Chemical declined comment.
And Citicorp has filed to issue $650 million in a convertible preferred stock known as preferred equity redemption cumulative stock.
Bankers Trust will offer to exchange one new depositary share, carrying a $50 value and representing a half-interest in a share of new series J fixed/adjustable cumulative preferred stock, for one share of series D fixed/adjustable cumulative preferred, according to a filing with the SEC.
The preferred shares being replaced were issued in August 1989. They carry a fixed 8.72% coupon for five years. After five years, the coupon will float off an index of Treasury securities.
The new series J stock will carry a fixed rate for five years, and then change to a floating rate.
The offer will be conditioned on receiving at least 1.5 million shares of series D preferred, worth $75 million, and will be limited to no more than 3 million shares, worth $150 million., according to the filing.