Morning Commentary: Qwest to price $25-par notes; Wells Fargo issue frees to trade; market dips

By Stephanie N. Rotondo

Seattle, April 18 – The preferred stock primary market got another new issue added to the calendar on Tuesday, as Qwest Corp. announced plans to sell at least $250 million of $25-par notes due 2057.

Price talk is 6.75%, according to a market source.

A trader saw the paper at $24.75 bid, $24.87 offered in the early gray market.

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

Proceeds will be used with available cash or intercompany borrowings to redeem all $500 million of the 6.5% notes coming due June 1 and all $288.5 million of the 7.5% $25-par notes due 2051 (NYSE: CTW).

The redemption of the maturing notes will be done at a premium. The 7.5% notes were lower in the wake of the announcement, falling 15 cents at mid-morning to trade at $25.38.

Meanwhile, Wells Fargo & Co.’s new $600 million issue of 5.625% series Y class A noncumulative preferreds freed to trade early on Tuesday, a trader reported.

The paper was pegged at $25.05 bid, $25.09 offered.

The deal came Monday, upsized from $250 million and tighter than the 5.875% price talk.

Wells Fargo Securities led the deal.

As for the bank’s 5.5% series X class A noncumulative preferreds (NYSE: WFCPrX), they were holding steady at par.

Overall, the preferred space was deemed by one source to be “slightly softer with the stock market off, but nothing major.”

The Wells Fargo Hybrid and Preferred Securities index was down 3 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was down 9 bps.

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