M&T Bank prices $1,000-par preferreds tight to price talk; People’s new $25-pars improve

By Stephanie N. Rotondo

Seattle, Oct. 25 – The preferred stock market was firming up again on Tuesday, which was helping the primary market continue to push out deals.

The Wells Fargo Hybrid and Preferred Securities index finished up 32 basis points, after being up 8 bps at mid-morning.

M&T Bank Corp. sold $500 million of 5.125% $1,000-par series F fixed-to-floating rate noncumulative preferreds as the day wound down.

Price talk was 5.25%.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, RBC Capital Markets and UBS Securities LLC are running the books.

After the close, a market source said the deal was launched at 5.125%, though he had not seen it actually price.

He placed the paper at 100.375 bid, 100.75 offered in the gray market.

When declared, dividends will be fixed and payable semiannually through Nov. 1, 2026. After that date, the rate will begin to float at Libor plus 352 bps and will be paid on a quarterly basis.

The Buffalo, N.Y.-based bank plans to use the proceeds for general corporate purposes, which may include the redemption of the 6.875% series D noncumulative perpetual preferred stock.

As for Monday’s deals, People’s United Financial Inc.’s $250 million offering of 5.625% $25-par series A fixed-to-floating rate noncumulative preferreds continued to skyrocket, with a trader seeing the paper at $26.12 bid early in the day.

He opined that the massive jump over parity was due to the manager dealing with a large short position.

On Monday, a market source said the deal’s success was because of the 10-year non-call structure, which is unusual.

By day’s end, the paper was seen at $26.20, which one market source deemed as “impressive.”

The source also noted that the issue was quite active, with nearly 1.34 million shares exchanged.

The issue freed to trade in early dealings.

The deal came tight to the 5.875% price talk via JPMorgan, Wells Fargo Securities LLC, Goldman Sachs & Co. and Keefe Bruyette & Woods.

Also from Monday, Charles Schwab Corp.’s $600 million of 4.625% $1,000-par series E fixed-to-floating rate noncumulative preferreds were pegged at 100.5.

The deal came upsized from $400 million. Price talk was 4.875%.

Citigroup Global Markets Inc., Credit Suisse, Goldman Sachs, JPMorgan and Wells Fargo ran the books.

Huntington wanes

Huntington Bancshares Inc.’s 6.25% series D noncumulative perpetual preferreds (Nasdaq: HBANO) were trading actively, but weaker, ahead of the company’s earnings release on Wednesday.

The preferreds fell 12 cents to $27.56.

The Columbus, Ohio-based bank is expected to see gains in revenue, as well as credit quality, according to Zacks Research. However, increased expenses could hurt the bottom line.

As such, Zacks is expecting flat earnings per share, but noted that the bank has a history of reporting earnings surprises.

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