Morning Commentary: Preferreds soft as week starts; Qwest to price $25-par notes; recent deals eyed

By Stephanie N. Rotondo

Seattle, Jan. 25 – The preferred stock market was weaker as the new trading week began.

The Wells Fargo Hybrid and Preferred Securities index was off 20 basis points at mid-morning.

Despite the softness, the new issue pipeline was pushing out a deal from Qwest Corp. The Monroe, La.-based subsidiary of CenturyLink said it was selling at least $150 million of $25-par notes due 2056.

Price talk is in the 7% area, according to a market source. BofA Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are running the books.

A trader said he had heard there was no selling group. He also noted that he had not seen any gray market quotes for the notes, though he speculated the paper was likely around $24.75 bid.

Qwest will use the proceeds to retire maturing debt.

Meanwhile, Bank of America Corp.’s $1 billion of 6.2% series CC noncumulative preferreds and Wells Fargo & Co.’s $875 million of 5.7% class A series W noncumulative perpetual preferreds were trading “around par,” according to the trader.

BofA brought its deal on Thursday, while Wells Fargo priced on Tuesday.

“People are starting to dip their toes back in the water in preferreds after getting smashed the last two weeks,” the trader said.

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