Morning Commentary: Preferreds continue to sink; DTE set to free up; NuStar to list on NYSE

By Stephanie N. Rotondo

Seattle, Nov. 29 – Preferred stocks remained moderately weak in early Tuesday trading.

The Wells Fargo Hybrid and Preferred Securities index was down 13 basis points at mid-morning.

DTE Energy Co.’s new $280 million of 6% $25-par 2016 series F junior subordinated debentures due 2076 – a deal priced Monday – were seen holding in a $24.75 to $24.80 context in early trading.

A trader said the issue “should free to trade soon.”

The deal came at the tight end of the 6% to 6.125% price talk via BofA Merrill Lynch, J.P. Morgan Securities LLC, UBS Securities LLC and Wells Fargo Securities LLC. The Detroit-based power producer will use proceeds to redeem $280 million of the outstanding 2011 series I 6.5% junior subordinated debentures due 2061 (NYSE: DTZ).

Those debentures were trading up 2 cents at $25.08 at mid-morning.

The redemption date is Dec. 28.

Meanwhile, a market source said NuStar Energy LP’s $200 million of 8.5% series A fixed-to-floating rate cumulative redeemable perpetual preferred units will begin trading on the New York Stock Exchange on Wednesday.

The ticker symbol will be “NSPA.”

A trader pegged the units at $25.10 bid, $25.18 offered on Tuesday.

The deal came Nov. 17, upsized from $150 million and priced in line with the 8.5% price talk.

Wells Fargo Securities, BofA Merrill Lynch and UBS Securities were the joint bookrunners.

The distribution rate will be fixed until Dec. 15, 2021, at which point it will float at Libor plus 676.6 bps.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.