Britain's Midland Bank Readying $250 Million Issue of Preferred
Siegel, David, American Banker
Midland Bank PLC, one of the biggest British banks, is marketing a $250 million issue of noncumulative preferred stock, according to market sources.
Merrill Lynch & Co. is lead manager of the deal, which is being marketed with a proposed dividend of 8.875%, according to the sources. Merrill Lynch declined to comment.
"The 8 7/8% yield will catch a lot of attention," said a capital markets source.
Retail Appeal Seen
Capital market sources said the issue is expected to have a strong appeal to retail investors because the preferred shares are likely to have an investment-grade rating and a yield of 275 basis points over the 30-year U.S. Treasury bond.
Midland's outstanding preferred shares are rated Baal by Moody's Investor Service, BBB-plus by Standard & Poor's Corp.
The bank's preferred stock dividend is subject to a 15% British withholding tax, but individual investors can offset that be getting a credit against their U.S. income tax.
The preferred issue will be priced this week, said market sources.
Midland is a subsidiary of HSBC Holdings, which is also the parent of Hongkong and Shanghai Banking Corp. …