Morning Commentary: Preferreds fluctuate in early trading; American Express new issue around par

By Stephanie N. Rotondo

Phoenix, Feb. 26 – The preferred stock market was experiencing some gyrations in early trading on Thursday, though mostly toward the upside.

The Wells Fargo Hybrid and Preferred Securities index was up 3 basis points at mid-morning but had been higher than that even earlier in the session. The index had even dipped slightly into negative territory.

In trading, American Express Co.’s new $850 million of 4.9% $1,000-par series C fixed-to-floating rate noncumulative preferreds – a deal priced Wednesday – was trading “just under par,” a trader said.

“They were pretty aggressive on that pricing,” he noted.

Initial price talk was 5.25%.

Barclays, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, RBC Capital Markets and Wells Fargo Securities LLC ran the books.

The dividend begins floating March 15, 2020 at Libor plus 328.5 bps.

Looking ahead, the trader said he had seen some shelf filings and was hearing chatter that there could be some larger deals entering the pipeline before March 15 – but likely after the Federal Reserve releases stress test results on March 11.

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