NuStar Energy sells upsized fixed-to-floating preferreds; Wells Fargo lists, drops below par

By Stephanie N. Rotondo

Seattle, April 25 – Buzz regarding a possible new preferred stock deal from a master limited partnership proved true on Tuesday as NuStar Energy LP brought a $350 million offering of 7.625% series B fixed-to-floating rate cumulative redeemable preferred units.

Price talk was initially 7.875% but was later revised to 7.625% to 7.75%.

“I expect them to do a price revision at any time now,” a trader noted ahead of the revision, seeing the paper at $24.95 in the early gray market.

Toward the end of business, the preferred units were pegged in a $25.05 to $25.15 context.

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

Distributions will be fixed until June 15, 2022, at which point the rate will float at Libor plus 564.3 basis points.

Proceeds will be used to help fund the acquisition of Navigator Energy Services LLC. The purchase price is $1,475,000,000.

As the market prepared for the deal to price, the company’s 8.5% series A cumulative redeemable preferred units (NYSE: NSPrA) were losing ground, slipping 4 cents to $26.49.

Meanwhile, Wells Fargo & Co.’s $600 million of 5.625% $25-par series Y class A noncumulative perpetual preferred stock began trading on the New York Stock Exchange, as was expected.

The ticker symbol is “WFCPrY.”

Though the issue dominated the session – over 2.79 million of the preferreds changed hands – the paper closed the day under par at $24.96.

The preferreds were seen at $25.08 in early trading, which compared to $25.06 at the open.

The deal priced on April 17. Price talk was 5.875%. The deal was increased from $250 million.

Wells Fargo was the bookrunner. BofA Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, RBC Capital Markets, Morgan Stanley & Co. LLC and UBS Securities were the joint lead managers.

Among other recent issues, American Homes 4 Rent’s $150 million of 5.875% series F cumulative redeemable preferreds – a deal from April 19 – were seen ending at $24.70.

That was unchanged day over day but off a nickel from the open.

The preferreds were quoted at $24.67 bid, $24.82 offered at mid-morning.

That issue has a temporary ticker, “AMHTP,” but is slated to hit the NYSE on Wednesday.

That symbol will be “AMHPrF.”

And, Qwest Corp.’s $575 million of 6.75% $25-par notes due 2057 – a deal priced April 18 – wrapped up the trading day at $24.85.

A market source noted that the volume weighted average price was $24.8376.

At Monday’s close, that same source saw the notes ending a par, though he said the VWAP of $24.82 was more accurate.

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