Primary pipeline picks up with new issues from AmTrust, BofA, Morgan Stanley; Ally gains

By Stephanie N. Rotondo

Phoenix, March 12 – Preferred stocks were “up significantly” for most of Thursday as investors reacted positively to the Federal Reserve’s release of the Comprehensive Capital Analysis and Review on Wednesday, a market source said.

However, the source said the space “ironically” ended “pretty much flat.”

The Wells Fargo Hybrid and Preferred Securities index closed off 1 basis point.

The CCAR results – which showed 28 U.S. banks passing the test – caused a pick-up in the primary space.

“Finally, we got some action,” a trader said. “I believe just about every bank will be launching a straight or hybrid issue in the next month.”

In the $25-par market, AmTrust Financial Services Inc. brought $165 million of 7.5% series D noncumulative preferreds.

Meanwhile, in the $1,000-par arena, Bank of America Corp. launched a $1.9 billion offering of 6.1% $1,000-par series AA fixed-to-floating rate noncumulative preferred stock.

Price talk was around 6.75%, a trader said.

“They will definitely bring that one in,” he said ahead of pricing.

Morgan Stanley & Co. Inc. also brought a $1,000-par deal, a $1.5 billion issue of 5.5% series J fixed-to-floating rate noncumulative preferreds.

Those were being talked at 5.75%, a trader said.

Separately, Ally Financial Inc.’s preferreds were trending higher after the company announced its capital plan, as approved by the Federal Reserve.

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