Midday Commentary: NuStar planning $25-par note sale; new Farmer Mac offering eyed

By Stephanie N. Rotondo

Phoenix, Jan. 14 - The week was kicking off with new issues in the preferred stock arena on Monday.

NuStar Logisitcs LP announced an offering of fixed-to-floating rate subordinated notes due 2043.

Price talk is 7.75% to 7.875%, according to a trader, though he speculated that the talk would be downwardly revised.

Earlier in the session, the trader saw the notes trade at $24.90 in the gray market. However, by midday that had come down to $24.80 bid, $24.90 offered.

"There's no selling group," the trader said of the expected $200 million deal. "It should do fine."

The trader was also hearing chatter about a new perpetual preferred deal from Federal Agricultural Mortgage Corp., or Farmer Mac as it is commonly referred to.

Price talk on that issue was 5.875% to 6%, but the trader said he expected that could come down as well.

"I thought the coupon was pretty high," he said. "We will probably see a big reduction in that."

However, the trader noted that he was "still trying to find out" if the deal had officially launched. He said he had not seen any markets as of midday.

Overall, there were "lots of markets" in the preferred space, but "not a lot of trading," according to a trader. He said the market was probably reacting to concerns over the debt ceiling debate and whether or not something could get done before the U.S. is hit with a credit downgrade.

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