TCF Financial prices new issue; Public Storage lists, NextEra up next; foreign banks firm up

By Stephanie N. Rotondo

Phoenix, June 18 - Preferred stocks were modestly higher Monday, helped out in part by the conclusion of Greece's election on Sunday that helped to diminish fears of the country's possible exit from the euro.

TCF Financial Corp. priced a new issue Monday. The deal grew from $100 million to $150 million and was priced at 7.5%, down from original talk around 7.75%.

The deal was said to be "doing pretty well."

"We'll probably see a lot more of these issues," a trader said. "It sounds like it's going to be a pretty heavy book, as long as retail keeps picking it up."

Elsewhere in the primary, Public Storage's 5.625% series U cumulative preferred stock officially listed on the New York Stock Exchange. NextEra Energy Capital Holdings Inc.'s $325 million issue of 5.625% $25-par series H junior subordinated debentures due 2072 are expected to list on Tuesday.

Both issues were among the day's most actively traded securities.

The conclusion of the Greek vote was meantime giving foreign banks a boost, according to a trader.

"We were expecting some of the foreign banks to bounce back," a trader said.

That expectation proved true. Preferreds from Deutsche Bank AG, Royal Bank of Scotland Group plc, ING Groep NV and Aegon NV rebounded.

"That could be short-covering too," the trader speculated, noting that all of those institutions still have some level of exposure to Spain.

The secondary market was also buzzing on news of yet another bank redemption, this time a $3.1 billion call from BB&T Corp.

Since the Federal Reserve released its proposed new capital treatment rules earlier this month, financial institutions have announced redemptions for nearly $20 billion of trust preferred securities.

TCF brings new issue

TCF Financial, the Wayzata, Minn.-based bank holding company for TCF National Bank, priced $150 million of 7.5% series A noncumulative perpetual preferred stock on Monday.

Price talk was originally around 7.75%, according to a trader.

A trader saw the paper trading at $24.95 in the gray market at midday.

TCF will apply to list the new preferred issue on the NYSE under the ticker symbol "TCBPB." Settlement is expected June 25.

Morgan Stanley & Co. LLC and UBS Securities LLC are the joint bookrunners. The co-managers are RBC Capital Markets LLC and Stifel Nicolaus & Co. Inc.

Proceeds will be used to redeem the company's $115 million of 10.75% series I junior subordinated notes.

That issue (NYSE: TCBPA) closed at $25.35, down 30 cents, or 1.17%.

Public Storage lists

Public Storage's $250 million issue of 5.625% series U cumulative perpetual preferreds listed on the NYSE Monday, as was expected. The ticker symbol is "PSAPU."

The deal priced June 6.

The preferreds ended the day at $25.19, a 9-cent gain on the day.

A trader also noted that NextEra Energy's $325 million of 5.625% $25-par series H junior subordinated debentures due 2072 are expected to list on Tuesday.

That deal priced June 12.

A market source called the issue the day's most actively traded security and said it rose 55 cents to $25.55.

Foreign banks improve

As fears of a potential Greek exit from the euro subsided Monday, foreign banks were rebounding.

However, one trader speculated that the gains could be related to short-covering.

ING Groep's 7.375% perpetual hybrid capital securities (NYSE: IDG) gained 11 cents to close at $23.74.

In the RBS complex, the 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) moved up 19 cents, or 1.11%, to $17.24, while the 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) earned 24 cents, or 1.27%, ending at $19.16.

Deutsche Bank's 6.625% noncumulative trust preferreds (NYSE: DTT) meantime increased by 38 cents, or 1.62%, to $23.83, and Aegon's 6.375% perpetual capital securities (NYSE: AEH) improved by 22 cents to $22.91.

Bank redemptions rolling in

As financial institutions have digested the Fed's new proposed rules on how it will treat regulatory capital, many have jumped on the redemption bandwagon, calling securities that will no longer be considered tier 1 capital.

BB&T and Webster Financial Corp. were the latest to jump on board. BB&T announced a redemption of $3.1 billion of trust preferreds, while Webster called all $136.1 million of its 7.65% Webster Capital Trust IV preferreds.

The two redemptions join similar calls from Citigroup Inc., JPMorgan Chase & Co. and SunTrust Banks Inc., which announced redemptions of $4.9 billion, about $9 billion and $1.19 billion, respectively, of trust preferreds.

All told, nearly $20 billion of TRUPs have been called for redemption in barely over a week.

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