Morning Commentary: AXIS Capital on deck; recent issues trade; Deutsche Bank ticks higher

By Christine Van Dusen and Stephanie N. Rotondo

Atlanta, Oct. 31 – AXIS Capital Holdings Ltd. moved forward with an offering of preferred stock on a Monday that saw some activity in recent issues as investors primarily focused on the upcoming U.S. elections.

PNC Financial Services Group Inc.’s $525 million of 5% $1,000-par series S fixed-to-floating rate noncumulative preferreds that freed to trade on Friday were seen on Monday at 99.75 to 100.25, a trader said.

The deal came Thursday, upsized from $500 million and in line with the revised 5% talk. Initial price talk was 5.125%.

Also from last week, People’s United Financial Inc.’s $250 million offering of 5.625% $25-par series A fixed-to-floating rate noncumulative preferreds were pegged at 26.10 on Monday after closing Friday at 26.18.

And Charles Schwab Corp.’s $600 million of 4.625% $1,000-par series E fixed-to-floating rate noncumulative preferreds – also priced last week – were quoted Monday at 99.625, flat to Friday. Meanwhile, Deutsche Bank AG’s trust preferreds were up on Monday after the troubled German bank reported a surprise third-quarter profit on Thursday.

The 8.05% TruPs (NYSE: DKT) traded on Monday morning at $24.82, up 13 cents. The 7.6% TruPs (NYSE: DTK) were quoted on Monday at $24.34, up 2 cents.

The company reported a profit of €278 million, which compared to a loss of €6 billion the year before.

However, concerns remain over the proposed $14 billion settlement with the Department of Justice, related to the company’s dealings with mortgage-backed securities and how that might have impacted the 2008 financial crisis.

Deutsche Bank has said it would not accept the $14 billion proposal but that it would negotiate terms that were similar to those reached with its peers.

While investors were hoping for a quick turnaround on the deal, it was reported earlier in the month that a settlement might not come until January.

AXIS deal ahead

For its new deal, AXIS Capital is looking to price series E preferred shares, according to a filing with the Securities and Exchange Commission.

BofA Merrill Lynch, Morgan Stanley, UBS and Wells Fargo are the bookrunners.

The preferreds will be issued as depositary shares representing a 1/100th interest.

Dividends will be paid on a non-cumulative basis quarterly on Jan. 15, April 15, July 15 and Oct. 15 of each year.

The preferreds are redeemable at $25.00 per depositary share on a certain date.

The shares will be listed on the New York Stock Exchange under the symbol “AXSprE.”

The issuer is a Bermuda-based holding company for specialty reinsurance.

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