Northern Trust prices upsized preferreds; Eagle Bancorp on tap; UBS reports earnings

By Stephanie N. Rotondo

Phoenix, July 29 – The primary preferred stock market was showing signs of life on Tuesday.

Northern Trust Corp. launched and priced an offering of series C noncumulative perpetual preferred stock. The deal was originally expected to be in the neighborhood of $150 million but came upsized at $400 million.

The $25-par issue came at par to yield 5.85%, which compared to initial price talk of 6%.

Morgan Stanley & Co. LLC, BofA Merrill Lynch and Wells Fargo Securities LLC are running the books.

Post-pricing, a market source quoted the preferreds at $24.86 bid, $24.92 offered.

“It doesn’t look like there is any selling group,” a trader said at mid-morning, seeing paper trading at $24.90 in the gray market. He remarked that the deal’s decent performance thus far was due to there being “no other deals and it’s a good name.”

“They don’t have any other debt, so institutional buyers are snatching it up,” he said.

Meanwhile, Eagle Bancorp Inc. said it was selling at least $55 million of subordinated notes due 2024.

Sandler O’Neill + Partners LP is leading that offering.

Given the small size of the deal, a trader had yet to see any markets for the paper.

Overall, the market was trading about flat from Monday closing levels.

A source said the Wells Fargo Hybrid and Preferred Securities index ended down 3 basis points, but another source deemed the index unchanged on the day.

“Volume was better than yesterday but still on the light side,” the first source stated.

UBS earnings beat estimates

Investors were keeping an eye on foreign banks on Tuesday.

UBS AG reported better-than-expected earnings during the session. On the news, the Swiss bank’s floating-rate noncumulative trust preferred securities (NYSE: UBSPD) rose 11 cents to $20.22 in active trading.

For the second quarter, UBS saw net profit of CHF 792 million, which compared to CHF 690 million the year before.

Analysts polled by the Wall Street Journal were expecting earnings of CHF 750 million.

While the numbers came in higher than anticipated, the company’s struggles are not over. The bank also said Tuesday that it had settled with the German government in regards to a tax evasion investigation.

The settlement will cost the company about $403 million.

The company also noted that the United States is looking into allegations of foreign currency manipulation.

Meanwhile, Royal Bank of Scotland Group plc’s preferreds remained on the busy side as investors look forward to the bank’s earnings, which come out Friday.

However, the shares were coming in a little after its recent run-up, which began Friday after the Edinburgh-based bank released preliminary quarterly results.

The 6.4% series M noncumulative dollar preference shares (NYSE: RBSPM) fell a penny to $24.60. The 6.35% series N noncumulative dollar preference shares (NYSE: RBSPN) were also down a penny at $24.58.

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