Morning Commentary: Goldman plans sale of $1,000-par preferreds; Morgan Stanley comes in

By Stephanie N. Rotondo

Seattle, July 20 – The preferred stock primary got a new issue added to the calendar on Wednesday, as the Goldman Sachs Group Inc. announced an offering of $1,000-par series O fixed-to-floating rate noncumulative preferreds.

The New York-based investment bank is expected to sell $650 million of the preferreds. Initial price talk was in the 5.75% area, but a trader said he heard it was revised to 5.375%.

The trader saw the new issue trading around par in the early gray market.

Goldman Sachs & Co. is the bookrunner.

In its prospectus, the bank said it would use the proceeds to fund operations and for general corporate purposes. But the bank also announced on Wednesday that it was tendering for up to $650 million of its Apex capital securities.

In secondary trading, investors were reacting to word of a redemption at Morgan Stanley & Co. Inc. The firm said on Tuesday that it was redeeming $2.83 billion of four series of capital securities.

Come Wednesday, those issues were trading down toward their redemption prices of par plus accrued dividends. The most active of the issues, the 6.45% capital securities (NYSE: MSK), were off 63 cents, or 2.45%, at $25.13 early in the session.

Morgan Stanley also released its second-quarter results early Wednesday, beating the market’s expectations.

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