New issues from Qwest, Entergy stay in focus; Seaspan cumulative preferreds trade higher

By Christine Van Dusen

Atlanta, Aug. 12 – Investors in the preferred stock market on Friday were mostly focused on recent new issues as the spike in the Treasury market, prompted by disappointing economic data from the United States, didn’t do much to affect preferreds.

Qwest Corp. – which brought $850 million of 6.5% $25-par senior notes due 2056 late on Thursday – saw the new issue trade on Friday at $24.92, following Thursday’s level of $24.85 bid, $24.90 offered, a trader said.

The pricing was “pretty juicy compared to the existing listed,” he said.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, RBC Capital Markets LLC and Wells Fargo Securities LLC were the bookrunners for the deal, the proceeds of which will be used to redeem the company’s 7.5% $25-par notes due 2051 (NYSE: CTW).

That issue traded Friday morning at $25.45, flat to Thursday, and finished at about $25.48.

Meanwhile, the Entergy deals from Tuesday and Wednesday continued to trade.

Entergy Arkansas Inc.’s $410 million of 4.875% $25-par first mortgage bonds due 2066 – which priced Tuesday – traded Friday between $24.88 and $24.90 after Thursday’s $24.90.

Entergy Louisiana LLC’s $270 million of 4.875% $25-par collateral trust mortgage bonds due 2066 – from Wednesday’s business – traded between $24.77 and $24.82 after Thursday’s range of $24.70 to $24.75, the trader said.

Both issues came via BofA Merrill Lynch, Morgan Stanley and Wells Fargo. Both companies, which are units of Entergy Corp., plan to use the proceeds to redeem outstanding issues.

“No real rumors of a busy calendar, but I have a feeling we'll keep seeing these smaller-type deals keep coming,” a trader said. “I'm surprised we haven’t seen any larger bank deals. But everything keeps grinding tighter, so maybe they’ll do better if they wait.”

Seaspan trades

Looking at recently priced issues, Seaspan Corp.’s $225 million of 7.875% series H cumulative redeemable preferreds traded during the week.

After being spotted on Monday at $24.65 bid, $24.72 offered, the notes were seen Friday morning at $24.70, flat to Thursday. They finished Friday's session at $24.78.

That issue priced Aug. 4. It is trading under a temporary symbol, “SSWNP.”

GSE preferreds in focus

Away from recent new issues, a trader said Fannie Mae and Freddie Mac preferreds received some attention during the week.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) traded up 3 cents to $4.33 early in the week before dipping to $4.30 on Friday. At the end of the session the stock moved to $4.29.

Freddie’s 8.375% non-cumulative perpetual convertible preferreds (FMCKJ) were up a penny at $4.25 at the end of the week.

The government-sponsored entities are embroiled in a number of lawsuits, several of which hinge on the government’s “net worth sweep” amendment, which was enacted in 2012. Under the rule, the entities must send back a majority of their quarterly profits. This has upset some investors, who say the government is illegally conscripting the funds and misusing its role as conservator.

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