Qwest prices $25-par notes; Wells Fargo issue frees to trade, gets temporary ticker

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. sold $575 million of 6.75% $25-par notes due 2057.

The deal came in line with price talk but was increased from $250 million.

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 ran 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 24 cents to trade at $25.29.

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

It was also assigned a temporary trading symbol, “WFGGP.”

The issue close at $25.10, versus $25.07 at the open.

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

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 dipped 8 cents to $24.92.

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 slid 13 basis points. The U.S. iShares Preferred Stock ETF finished flat for the day, though it was down 9 bps earlier in the session.

Bank earnings roll out

Bank earnings continued to come out, with Goldman Sachs Group Inc. and Bank of America Corp. being the latest to announce first-quarter results.

Goldman’s results fell short of expectations, while BofA’s beat. Still, the day’s weakness weighed on both names.

Goldman’s floating-rate series D noncumulative preferreds (NYSE: GSPrD) fell 4 cents to $23.16, as BofA’s 6.2% series CC noncumulative preferreds (NYSE: BACPrC) lost a nickel, ending at $25.91.

For the quarter, Goldman posted a profit of $2.2 billion, an 80% gain over the previous year. On an adjusted basis, earnings per share was $5.15, lower than the $5.31 per share analysts polled by Thomson Reuters had forecast.

Revenue improved 27% to $8 billion, though trading revenue declined 2%.

The drop in trading revenue came as a surprise, as most other big banks saw sizable gains.

As for BofA, it reported adjusted EPS of 41 cents, better than the 35 cents analysts had expected. Revenue also beat expectations at $22.2 billion.

Fixed income trading revenue was $2.9 billion. Analysts had predicted $2.62 billion.

Morgan Stanley & Co. Inc. is slated to report its latest quarterly results before the open on Wednesday. Analysts are expecting to see EPS of 90 cents on revenue of $9.1 billion.

Ahead of the release, the bank’s 6.375% series I fixed-to-floating rate noncumulative preferreds (NYSE: MSPrI) were down 14 cents at $27.81.

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