Morning Commentary: Primary pipeline picks up with deals from AmTrust, BofA, Morgan Stanley

By Stephanie N. Rotondo

Phoenix, March 12 – Preferred stocks were firming up on Thursday as investors reacted positively to the Federal Reserve’s release of the Comprehensive Capital Analysis and Review on Wednesday.

The Wells Fargo Hybrid and Preferred Securities index was up 8 basis points at mid-morning.

The results – which showed 28 U.S. banks passing the test – caused a pick-up in the primary space.

“Finally, we got some action,” a trader said. “I believe just about every bank will be launching a straight or hybrid issue in the next month.”

AmTrust Financial Services Inc. announced plans to price series D noncumulative preferred stock, talked in a 7.5% to 7.625% context.

A trader said he saw a $24.62 bid in the early gray market.

Morgan Stanley & Co. LLC, UBS Securities LLC and Keefe Bruyette & Woods Inc. are the bookrunning managers.

Proceeds will be used for general corporate purposes, which may include working capital, capital expenditures and/or strategic acquisitions.

Meanwhile, Bank of America Corp. launched an offering of $1,000-par series AA fixed-to-floating rate noncumulative preferred stock.

Price talk is around 6.75%, a trader said.

“They will definitely bring that one in,” he said.

BofA Merrill Lynch is the bookrunner.

Morgan Stanley & Co. Inc. is also bringing a $1,000-par deal, an issue of series J fixed-to-floating rate noncumulative preferreds.

Those are being talked at 5.75%, a trader said.

“I’m sure they will bring that in,” he said.

Morgan Stanley is running the books.

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