U.S. Bancorp prices $1 billion preferreds; Fannie, Freddie firm; Vanguard in bankruptcy

By Stephanie N. Rotondo

Seattle, Feb. 2 – Rumors of a possible new deal for Thursday proved true as U.S. Bancorp brought a $1 billion benchmark offering of 5.3% $1,000-par series J fixed-to-floating rate noncumulative preferreds.

A market source said he saw the issue at par bid.

Ahead of pricing, a trader said he was hearing price talk around 5.625%.

“But we’ll see,” he remarked. “That seems pretty cheap.”

He speculated that talk could be revised closer to 5.5%, with actual pricing coming around 5.45%.

Initial price talk was, in fact, 5.625%, though it was later revised to 5.3%.

U.S. Bancorp Investments Inc., Barclays and Morgan Stanley & Co. LLC ran the books.

Dividends will be fixed and payable semiannually through April 15, 2027. At that time, the rate will begin to float at Libor plus 291.4 basis points and will be payable quarterly.

The bank said proceeds would be used for general corporate purposes, which may include the redemption of the 6% series G fixed-to-floating rate noncumulative preferred stock (NYSE: USBPrN).

That issue was down 2 cents at $25.37 at mid-morning.

Meanwhile, Vanguard Natural Resources LLC said it had filed for bankruptcy protections on Thursday.

“Not that it wasn’t expected,” a trader commented.

Still, the oil and gas company’s preferred units were getting knocked down on the news.

Away from Vanguard, GSE paper remained busy. Fannie Mae and Freddie Mac preferreds pushed higher once again.

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