Capital One upsizes preferreds, prices tighter than talk; recent deals eyed; Ally firms

By Stephanie N. Rotondo

Seattle, July 26 – The preferred stock primary market saw another deal on Tuesday, with Capital One Financial Corp.’s planned sale of at least $250 million of series G noncumulative perpetual preferreds.

The deal swelled to $600 million and came at 5.2%, “well below” initial price talk of 5.375% to 5.5%, a market source commented.

That source saw the issue trading at $24.92 bid, $24.98 offered in the gray market.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC ran the deal.

In the wake of the new deal, the company’s existing preferreds were waning.

The 6% series B noncumulative preferreds (NYSE: COFPP) dipped 7 cents to $26.13.

The McLean, Va.-based diversified financial services company plans to use the proceeds for general corporate purposes.

As for Monday’s new issue, Bank of New York Mellon Corp.’s $1 billion of 4.625% $1,000-par series F fixed-to-floating rate noncumulative preferreds were seen at 100.125 bid, 100.25 offered in early trading.

“It seemed to close at par,” a source said later in the day. “My guess it was the involvement of the underwriters that kept it at par. “Otherwise, I think it is likely to trade up from there.”

That deal came via BofA, Citigroup Global Markets Inc., Morgan Stanley, UBS Securities and BNY Mellon Capital Markets LLC.

Among other deals from the month, Dominion Resources Inc.’s $800 million of 5.25% 2016 series A $25-par enhanced junior subordinated notes due 2076 (NYSE: DRUA) dominated the day, with nearly 1.4 million of the securities changing hands.

The paper came in 4 cents to $25.01.

The notes priced July 12 and listed on the New York Stock Exchange on Monday.

Meanwhile, Public Storage’s $300 million of 4.95% series D cumulative preferreds (NYSE: PSAPD) were active but closed a penny weaker at $24.95.

That issue came July 13.

Ally up with earnings

Away from new and recent issues, Ally Financial Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPA) continued to be busy, though not as busy as they were on Monday.

The preferreds rose 15 cents to finish the day at $25.25.

On Tuesday, the former lending arm of General Motors Co. reported earnings that beat expectations. For the quarter, profit came to $360 million, or 71 cents per share. On an adjusted basis, EPS was 54 cents, up from 46 cents the year before.

Analysts polled by Reuters had forecast EPS of 51 cents.

The better-than-expected figures came even as Ally saw its car loans unit dwindle. But there was solid improvement in retail deposits, in the mortgage finance unit and in the corporate finance business.

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