Regions prices new issue; Citigroup's $1,000-par preferreds free up; Morgan Stanley comes in

By Stephanie N. Rotondo

Phoenix, April 24 - Regions Financial Corp. brought a new issue to the preferred stock primary arena Thursday.

On Wednesday, there was talk that Regions was bringing a deal, but the day passed without any word from the Birmingham, Ala.-based bank. Come Thursday, the company priced $500 million of series B fixed-to-floating-rate noncumulative perpetual preferreds at par to yield 6.375%.

The issue priced shortly before the close. After pricing, a trader said the issue had "traded up strong," but then someone was throwing paper back into the mix, causing the issue to "get banged up a bit."

He saw the shares ending at $24.73 bid.

Another trader quoted the preferreds at $25.75 bid, $24.80 offered.

Price talk was 6.375% to 6.5%, a trader said prior to pricing.

"I think that's a little rich for the rating," he said.

The trader also noted that there was no selling group, seeing the paper trading around $24.90 in the gray market.

The issue begins floating Sept. 15, 2024 at Libor plus 353.6 basis points.

Goldman Sachs & Co., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the joint bookrunning managers. Regions Securities LLC is the lead manager.

Regions' 6.375% series A noncumulative perpetual preferreds (NYSE: RFPA) meantime traded down 11 cents to $24.00.

Citigroup details emerge

As for other deals from the week, Citigroup Inc. released details on its offering of $1.75 billion 6.3% $1,000-par series M fixed-to-floating-rate noncumulative preferreds.

The deal priced late Wednesday.

A trader said the issue had freed to trade by mid-morning, pegging the shares at 99.75.

When declared, dividends will be paid at a fixed rate on a semiannual basis until May 15, 2024, at which time the securities will begin floating at Libor plus 342.3 bps. Once floating, the dividend will be payable on a quarterly basis.

Citigroup Global Markets Inc. was the bookrunner.

Preferreds modestly higher

Meanwhile, Morgan Stanley's $500 million of 6.625% $25-par series G noncumulative perpetual preferred stock - a deal that priced and freed on Tuesday - was trading at $24.98 bid, par offered, according to a trader early in the day. But after the bell, another trader remarked that the issue had been "wrapped around par this morning, then it faded off towards the end of the day."

He pegged the issue around $24.96.

Goldman Sachs Group Inc.'s $700 million issue of 6.375% $25-par series K fixed-to-floating-rate noncumulative preferreds were seen at $25.15 as of mid-morning. At the close, a trader placed the shares at $25.10.

"It did very well," the trader said.

Goldman came on Monday.

Generally, preferreds were modestly higher. The Wells Fargo Hybrid and Preferred Securities index was up 3 bps early in the session, rising to finish up 9 bps.

A trader said he was already hearing of deals for next week, including American Homes 4 Rent's previously announced offering of series C participating preferred shares.

That deal is coming via Morgan Stanley, Raymond James & Associates Inc. and Jefferies LLC.

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