Recent preferred deals mixed; First Republic sells upsized issue at tight end of talk

By Stephanie N. Rotondo

Seattle, Feb. 3 – A preferred stock trader said recently priced deals were under “some selling pressure” in midweek trading.

Bank of America Corp.’s $1 billion of 6.2% series CC non-cumulative perpetual preferred stock (NYSE: BACPC) was pegged at $25.30 early in the session but eventually capped its losses, ending the day a penny higher at $25.39.

Meanwhile, Wells Fargo & Co.’s $875 million issue of 5.7% series W class A noncumulative perpetual preferred stock (NYSE: WFCPW) declined 22 cents to $24.97.

The paper was seen at $25.05 at midday.

Bank of America’s preferreds came Jan. 21. Wells Fargo priced its deal on Jan. 19.

From last week’s business, Citigroup Inc.’s 6.3% series S noncumulative preferreds were quoted at $24.95 bid, par offered, closing at par. That was unchanged on the day.

Those preferreds came Jan. 26, with $900 million shares being sold. On Monday, a market source reported that the greenshoe was exercised, lifting total issuance to $1.35 billion.

The paper is trading under a temporary ticker, “CTGGP.”

Despite the weakness seen in the newer issues, First Republic Bank brought an upsized offering of series G noncumulative perpetual preferreds.

The $150 million deal – upsized from $100 million – came after traders reported rumors of a regional bank deal on Tuesday.

The dividend came at 5.5%. Price talk was in a 5.5% to 5.625% area, according to a market source.

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

A trader saw a $24.60 bid for paper in the early gray market and trades around $24.75 post-pricing.

Another market source said the issue traded as high as $24.80.

Overall, the market had a softer tone yet again, even as oil prices sought to rally.

The Wells Fargo Hybrid and Preferred Securities index was down 17 basis points. For its part, domestic crude oil was up nearly 9% as Bloomberg reported that analysts were expecting a significant price rebound by the end of 2016 and others were hoping Russia and OPEC could come to terms on a plan to cut production.

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