Market ends soft; Capital One frees to trade; Legacy Reserves prices upsized units at 8%

By Stephanie N. Rotondo

Phoenix, June 10 – Preferred stocks were trending downward during Tuesday trading.

By day’s end, the Wells Fargo Hybrid and Preferred Securities index was off 18 basis points. At mid-morning, it had been down just 5 bps, following in line with the straight equity markets, which were also on the decline.

But as the common stock markets managed to recoup the early losses, the preferred market did not.

A trader said Capital One Financial Corp.’s new $500 million issue of 6.25% series C fixed-rate noncumulative perpetual preferreds freed from the syndicate early in the session.

The trader said the paper was trading around par at mid-morning.

“It was pretty active,” another market source said after the bell. However, he also noted that the preferreds “kept pushing kind of lower throughout the day.”

He quoted the preferreds at $24.80 bid, $24.85 offered.

The deal priced Monday, coming upsized from $250 million and at the tight end of revised talk.

Meanwhile, Legacy Reserves LP announced – and priced – an offering of series B fixed-to-floating rate cumulative redeemable preferred units on Tuesday.

The company sold $175 million of the units at par to yield 8%.

Price talk was 8% to 8.125%, according to a trader. The deal was upsized from $100 million.

At late morning and prior to pricing, a source said the units were at $24.65 bid, $24.75 offered. The units weakened toward the end of the day, leaving them $24.60 bid, $24.70 offered, according to the source.

UBS Securities LLC, Morgan Stanley & Co. LLC, Stifel Nicolaus & Co. Inc. and MLV & Co. LLC are the joint bookrunning managers. Janney Montgomery Scott LLC is the senior lead manager. Co-managers include J.P. Morgan Securities LLC, Ladenburg Thalmann & Co. Inc. and Oppenheimer & Co.

The dividend will be fixed for 10 years and will then reset monthly based on Libor plus 525.6 bps.

Prudential weakens

Prudential Financial Inc. had a busy but soft day, following on the heels of the company’s financial strength symposium on Monday.

The 5.7% $25-par junior subordinated notes due 2053 (NYSE: PRH) ended down 12 cents at $24.19, with about 1.09 million securities trading. The 5.75% $25-par junior subordinated notes due 2052 (NYSE: PJH) finished off 6 cents at $24.56, on trading of over 600,000 securities.

Though the notes were weaker on the day, the company presentation showed that things have been looking up. A slide presentation posted along with an 8-K filed on Monday showed that the company’s bottom line has been steadily climbing higher since 2010.

Prudential is a Newark, N.J.-based life insurance company.

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