Morgan Stanley's new issue comes hugely upsized; Fifth Third frees to trade; BB&T weakens

By Stephanie N. Rotondo

Phoenix, Dec. 5 - The preferred stock market was focusing on the primary market on Thursday.

Morgan Stanley & Co. Inc. announced a deal early in the day, a $250 million offering of $25-par series F fixed-to-floating rate noncumulative preferred stock.

Price talk was 6.875% to 7%, according to a market source.

"It seems like they cut everybody out," a trader said of the underwriting, noting that it appeared to be going to mainly institutional clients and "within [the underwriter's] own retail."

The trader saw the issue at $24.90 in the early gray market. Later in the day, the issue was pegged at $24.90 bid, $24.93 offered.

Pricing came at the close and the deal was massively upsized: $850 million of the preferreds were priced at par to yield 6.875%.

The issue begins to float on Jan. 15, 2024 at Libor plus 394 basis points.

Morgan Stanley ran running the books.

As for the investment bank's 7.125% series E fixed-to-floating rate noncumulative preferreds (NYSE: MSPE), they were down a quarter at $26.09.

That $750 million issue priced on Sept. 24. The issue begins floating on Oct. 15, 2023 at Libor plus 432 bps.

Meanwhile, Fifth Third Bancorp's $450 million of 6.625% $25-par series I fixed-to-floating rate noncumulative perpetual preferred stock - a deal that came Wednesday - "has been pretty active," the trader said.

The issue freed up before the market opened, he noted.

Paper was trading at par "or a little better," the trader said at mid-morning. Toward the end of the day, it was seen at par bid, $25.03 offered.

Overall, the market was "softer with the Treasuries, but not materially so," a trader said, opining that $25-par issues were down 15 cents to 20 cents.

The Wells Fargo Hybrid and Preferred Securities index was off 16 bps at mid-morning but dropped considerably to end off 45 bps.

BB&T takes a hit

BB&T Corp.'s issues were on the active side and weaker in Thursday trading.

The 5.85% series D noncumulative preferreds (NYSE: BBTPD) declined the most, losing 14 cents to $21.22. The 5.625% series E noncumulative preferreds (NYSE: BBTPE) dropped 13 cents to $20.07.

The 5.2% series F noncumulative preferreds (NYSE: BBTPF) saw the most action, with over 1.04 million shares changing hands. The issue finished the day at $18.69, down 7 cents.

And, the 5.2% series G noncumulative preferreds (NYSE: BBTPG) were also off 7 cents, closing at $18.71.

BB&T is a Winston-Salem, N.C.-based financial institution.

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