Midday Commentary: Wells Fargo heralds new issue; trader sees 'large demand'; market eases

By Stephanie N. Rotondo

Phoenix, Dec. 11 - Wells Fargo & Co. added a new deal to the preferred stock calendar on Wednesday.

The San Francisco-based bank said it was selling series R class A fixed-to-floating rate noncumulative perpetual preferreds that are talked around 6.625%.

"I imagine they'll change that," a trader said of the price talk. "We're still waiting to see if they are going to have a large selling group. There is large demand for it."

The trader saw the new issue at $24.90 bid, $24.95 offered in the early gray market.

Meanwhile, Morgan Stanley & Co. Inc.'s $850 million of 6.875% series F fixed-to-floating rate noncumulative preferreds were trading around $24.95 and Fifth Third Bancorp's $450 million of 6.625% series I fixed-to-floating rate noncumulative preferreds were offered at par, according to a trader.

Both deals came last week.

"I thought we'd see a little kick what with the government saying they have a debt deal so they can avoid a shutdown in January," the trader said of the preferred space's overall performance as of mid-morning. That wasn't really happening, he lamented.

"A lot of stuff went ex-dividend," he added.

The Wells Fargo Hybrid and Preferred Securities index was trading off 13 basis points shortly before midday.

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