Capital One sells upsized $25-par preferreds; NuStar gets temporary ticker; AXIS to list

By Stephanie N. Rotondo.

Seattle, Nov. 21 – Rumors of a new preferred stock issue during the shortened holiday week proved true on Monday as Capital One Financial Corp. announced an offering of series H noncumulative perpetual preferreds.

The McLean, Va.-based financial services company launched the deal at $200 million, with price talk around 6.125%. It came upsized at $500 million and priced at par to yield 6%.

BofA Merrill Lynch, J.P. Morgan Securities LLC, UBS Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC ran the books.

At the end of the session, a market source saw the issue at $24.75.

A trader saw the issue at $24.85 in the early gray market.

Proceeds will be used for general corporate purposes.

On the heels of the new deal, the 5.2% series G noncumulative perpetual preferreds – a $600 million deal priced July 26 – were off 21 cents at $22.39.

From last week’s business, NuStar Energy LP’s $200 million of 8.5% series A fixed-to-floating rate cumulative redeemable perpetual preferred units were seen at $24.90 bid, with no right side at mid-morning.

However, the issue eventually traded up to par, which was a gain of 13 cents on the day.

More than 1.09 million units changed hands during the trading day.

The deal came Thursday, upsized from $100 million and in line with price talk. The units begin to float on Dec. 15, 2021 at Libor plus 676.6 basis points. The issue freed to trade Friday afternoon.

The units are trading under a temporary symbol, “NTSRF.”

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

Meanwhile, a market source said AXIS Capital Holdings Ltd.’s $550 million of 5.5% series E noncumulative preferred shares will begin trading on the New York Stock Exchange on Tuesday.

The ticker symbol will be “AXSPE.”

The deal came Oct. 31 and included a $50 million greenshoe.

The issue is trading under a temporary symbol, “AXHHF.”

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

That paper was trading at $23.20 at mid-morning, down 25 cents, or 1.07%. It closed at $23.25, a loss of 20 cents.

The preference shares started the day at $23.50, which was up a nickel from Friday’s close.

Secondary trades up

Away from new issues, secondary trading continued to be centered on Fannie Mae and Freddie Mac.

Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were up 18 cents, or 3.35%, at $5.56. Approximately 2.13 million of the preferreds were traded during the session.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were meantime up 34 cents, or 6.12%, at $5.90. Nearly 862,500 of those shares were exchanged.

Huntington Bancshares Inc.’s 6.25% series D noncumulative preferreds (Nasdaq: HBANO) also made the day’s most active list, with just over 1 million of the preferreds changing hands. However, the issue bucked the day’s upward trend – the Wells Fargo Hybrid and Preferred Securities index ended up 58 basis points – by declining 6 cents to $25.98.

In the oil and gas space, Vanguard Natural Resources LLC’s preferred units were among the day’s biggest percentage gainers, as domestic crude oil prices surged over 4% on optimism that OPEC will reach a production cut deal next week in Vienna.

The 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were the most active of the company’s units, rising 90 cents, or 39.13%, to $3.20. The 7.75% series C cumulative redeemable preferred units (Nasdaq: VNRCP) improved 95 cents, or 38.31%, to $3.43, while the 7.875% series A cumulative redeemable preferred units (Nasdaq: VNRAP) added 59 cents, or 19.67%, to close at $3.59.

Russia – a major non-OPEC producer that has been involved in the talks – has said that it sees no obstacle to the output agreement, and last week, OPEC offered Iran a deal to cap production, but not freeze it.

Iran has been a holdout, given that it is still trying to ramp up production to pre-sanction levels.

Preliminary discussions on a potential agreement are taking place in Vienna ahead of the meeting next week. Thus far, those participating have expressed optimism that a deal will be reached.

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