HSBC called notes lead secondary market; Bank of America down as new issue announced

By James McCandless

San Antonio, May 7 – The preferred market saw a modest amount of activity on Monday, according to traders, as the secondary market was dominated by issues being called.

HSBC Holdings plc securities fell after the company issued a redemption notice for two series of capital securities on Friday.

Bank of America Corp. preferreds were down as the company announced a new preferred issue on Monday morning. The $1.2 billion offering of preferreds then priced after the close with a 6% dividend, in line with talk.

Energy Transfer Partners, LP’s recent issue started the week atop the preferred market in volume again.

HSBC issues redemption notice

HSBC’s 8.125% and 8% perpetual subordinated capital securities exchangeable non-cumulative dollar preference shares fell as the company announced last Friday that both issues would be redeemed on June 4, 2018.

“A lot of people are trying to position themselves for when the redemption occurs,” a trader said.

The 8.125% preference shares lost $1.09 to close at $25.27 with about 689,000 shares exchanged.

The 8% preference shares lost 74 cents to close at $25.44 with about 805,000 shares exchanged.

Bank of America off

Bank of America’s 6% series EE non-cumulative preferred stock led the market down after the company announced Monday morning that it would be pricing a new series of preferred stock.

Price talk for the new issue was for a size of $1.2 billion with a 6% dividend. Final terms matched talk.

With about 671,000 shares of the series EE preferreds trading, the stock lost 47 cents at $25.42.

Energy Transfer down

Energy Transfer’s recently priced series C fixed-to-floating rate cumulative redeemable perpetual preferred units started the week down with about 450,000 shares exchanged.

The 7.375% units priced after the market close on April 18.

The units shaved off 8 cents to close at $24.92.

Indexes mixed

The Wells Fargo Hybrid & Preferred Securities Financial index lost 0.18% at the end of trading, reversing an 0.08% gain early Monday.

The iShares US Preferred Stock ETF gained 6 cents to close at $37.05.

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