Midday Commentary: Allstate's new fixed-to-floating issue takes off; market firm, but subdued

By Stephanie N. Rotondo

Phoenix, Jan. 4 - The first new issue of 2013 was "ripping," a trader said Friday.

Allstate Corp. priced a $500 million offering of 5.1% $25-par fixed-to-floating rate subordinated debentures due 2053 late Thursday. The deal was doing well even ahead of pricing, but popped come Friday's session.

The trader said "big blocks" of the notes were trading around $25.65 at midday.

"It sounds a little nuts to me," the trader said, noting that he had "a different opinion of where interest rates are going."

Still, he said the overall structure of the deal, with its "floating component" and 10 years of call protection, was "decent."

"They didn't give out a lot," he said of the underwriting group. There was no selling group. The gains seemed "organic," he said, and not due to managers covering shorts.

Despite the activity in the new issue, the preferred market was a little subdued Friday morning, as it had been all week. Some market players remained out, not intending to return to their desks until Monday.

"I thought we'd see a little more of a back-up when the 30-year [Treasury bond] moved," a trader said, but aside from a slight tightening, the preferred market was moving right along.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.