Goldman Sachs, National Rural sell hybrid notes; CoBank's perpetual preferreds trade well

By Andrea Heisinger

New York, April 18 - Two new sales were completed in the preferred stock market Thursday following a quiet period in the first half of the week.

"It's been quite flat with normal volume," a trader said at midday. A bit later in the day another trader said that "there's just nothing going on. It's really quiet."

Goldman Sachs Group Inc. priced a $1 billion self-led offering of 5.5% series J fixed-to-floating rate noncumulative preferred stock, according to a market source.

"It's done well in the gray [market]," the market source said at midday, quoting the hybrids at $25.05.

Initial guidance was in the 5.125% to 5.75% area and later revised to 5.5% to 5.6%.

The dividend will begin floating on May 11, 2023 at Libor plus an as-of-yet undetermined spread.

A trader said in the afternoon that the preferreds were "looking so strong, it's almost shocking." The sale was expected to free to trade later on Thursday.

National Rural Utilities Cooperative Finance Corp. sold $400 million of 4.75% 30-year fixed-to-floating rate subordinated deferrable interest notes, a market source said.

Price talk was in the high 4% to low 5% area, the source added. The size of the offering was increased from $250 million.

There was no gray market seen for the notes at midday, as is normal for a $1,000-par sale, the source said.

The notes will have a fixed rate until 2023 and then a floating rate based on Libor.

J.P. Morgan Securities LLC, RBC Capital Markets LLC and RBS Securities Inc. were the bookrunners.

Proceeds will be used for general corporate purposes, possibly including the redemption of some or all 6.1% subordinated notes due 2044, to redeem some or all 5.95% subordinated notes due 2045 and to repay short-term debt.

The market lender for electric cooperatives is based in Herndon, Va.

Elsewhere in the market, a trader saw Goldman Sachs Group's series I preferred as the most active at midday, quoting the issue off 24 cents at $25.65.

The recent issuance from CoBank ACB was seen trading at 101.125 early on Thursday, a trader said.

"It's done well," he added.

The $200 million issue of 6.125% $100-par series G noncumulative perpetual preferreds came late Monday.

First Republic Bank's $175 million issue of 5.5% series D noncumulative preferreds were quoted at $24.90 early on Thursday, with little trading seen in the afternoon, a trader said.

The shares were seen at $24.85 bid, par offered on Wednesday after they freed to trade.

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