Preferreds rebound, end stronger; Morgan Stanley lists on NYSE; Qwest frees to trade

By Stephanie N. Rotondo

Phoenix, Sept. 23 – Preferred stocks managed to end with a firm tone on Tuesday after being soft earlier in the day.

The Wells Fargo Hybrid and Preferred Securities index ended up 11 basis points but was down 4 bps at mid-morning.

“Liquidity was better, but it was really restricted to a handful of names,” a market source said.

One such name was Morgan Stanley & Co. Inc., whose $1 billion of 6.375% series I fixed-to-floating rate noncumulative perpetual preferred stock gained admittance to the New York Stock Exchange on Tuesday.

The deal came Sept. 11, with Morgan Stanley & Co. LLC running the books. The ticker symbol is “MSPI.”

The preferreds closed at $25.10, down a dime on the day. The preferreds were trading at $25.12 early in the day, which compared to opening levels of $25.15.

Another actively traded issue was Bank of America Corp.’s 6.625% series W noncumulative perpetual preferreds (NYSE: BACPW), a $1 billion issue that priced Sept. 2.

Those preferreds ended the day at $24.92, up 3 cents.

In more recently priced deals, a market source said Qwest Corp.’s new $500 million issue of 6.875% $25-par senior notes due 2054 freed to trade later in the day.

The source said the notes last traded at $24.54 but noted that the volume weighted average price was $24.736.

Earlier in the session, a trader said the new issue, which priced on Monday, was “trading weak” in a $24.57 to $24.60 context.

The deal came via BofA Merrill Lynch, Morgan Stanley, UBS Securities LLC and Wells Fargo Securities LLC, upsized from $250 million and at the tight end of talk.

Among other recently priced deals, there was “not a lot of action” in the Gabelli Healthcare & WellnessRx Trust’s $35 million issue of 5.875% series B cumulative perpetual preferreds, a trader said. However, the issue was seen straddling par.

The trader quoted the shares at $24.90 bid, $25.05 offered.

No other new issues had been announced as of Tuesday morning, the trader said, though he expected the deal flow to remain steady.

“From what we are hearing, it should be a relatively decent calendar,” he said. “So maybe we’ll see something announced tomorrow.”

Realty Income active

Realty Income Corp.’s 6.75% class E cumulative redeemable preferreds (NYSE: OPE) were another actively traded issue on Tuesday.

The $220 million issue was called Sept. 16 for Oct. 24.

More than 1 million of the preferreds changed hands during the session, ending flat at $25.14.

Realty Income is an Escondido, Calif.-based real estate investment trust.

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