U.S. Bancorp issues active as investors jockey; PNC active but weaker; PPL calls preferreds

By Stephanie N. Rotondo

Portland, Ore., April 20 - Recent new deals dominated the preferred stock market on Friday, traders reported.

U.S. Bancorp's $1.09 billion issue of fixed-to-floating-rate series G noncumulative preferreds were very active but holding steady, one trader said. Other U.S. Bancorp issues were also active such as the 6.5% series F noncumulative perpetual preferreds, which priced earlier this year, and the 6.3% trust preferreds, an issue being redeemed with proceeds from the latest deal.

Meanwhile, PNC Financial Services Group, Inc.'s new $1.5 billion of fixed-to-floating-rate series P noncumulative preferreds continued to trade busily. However, the paper traded down a bit from where it was seen in the previous session.

U.S. Bancorp issues active

A trader said U.S. Bancorp's newly priced $1.09 billion offering of fixed-to-floating-rate series G noncumulative perpetual preferreds was the day's top trading security, with over 3.3 million shares turning over.

The trader called the issue unchanged at $25.47.

The trader also noted that the 6.5% series F noncumulative perpetual preferreds (NYSE: USBPM) were active and fell 33 cents, or 1.22%, to $26.72.

He remarked that the Fs were issued earlier in the year, Jan. 15 to be exact, and that "people have been selling the old deal to go into the new deal."

But the USB action didn't stop there. The 6.3% trust preferreds (NYSE: USBPK), an issue that is being redeemed with proceeds from the sale of the Gs, were busy but flat at $25.38.

The other issue being redeemed with proceeds from the new deal, the 6.6% trust preferreds (NYSE: USBPJ), rose a penny to $25.27.

The dividend rate of the new preferreds will be fixed at 6% until April 15, 2017, at which time the rate will be calculated yearly at Libor plus 486.125 basis points.

The deal priced Tuesday and was instantly trading at a premium, hitting highs around $25.50.

The company will apply to list the preferreds on the New York Stock Exchange under the ticker symbol "USBPN." Settlement was expected Friday.

Morgan Stanley & Co. LLC, Goldman Sachs & Co. and U.S. Bancorp Investments Inc. were the joint bookrunners. Mesirow Financial Inc., Oppenheimer & Co. Inc., Raymond James & Associates Inc., RBC Capital Markets LLC and Stifel, Nicolaus & Co. Inc. were co-managers.

U.S. Bancorp is based in Minneapolis.

PNC comes back in

PNC Financial Services Group's new $1.5 billion of 6.125% fixed-to-floating-rate series P noncumulative perpetual preferred stock came in a little bit from where they were trading Thursday.

The deal priced at par on Thursday.

"Once they adjusted the price talk, it came in pretty quickly," a trader said. Original talk was 6.25% to 6.375%.

"It has been active," the trader noted, seeing paper at $25.08 bid, $25.15 offered around midday in the gray market.

After the close, a trader said the preferreds were "hanging in there" around $25.15.

"It sort of stalled out there," he said. "It traded higher earlier in the day."

PNC will apply to list the preferreds on the NYSE under the ticker symbol "PNCPP."

Morgan Stanley, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and PNC Capital Markets LLC are the joint bookrunning managers.

Proceeds will be used for general corporate purposes, including the repurchase and redemption of outstanding PNC and subsidiary securities, including trust preferreds.

PNC is based in Pittsburgh.

PPL calls preference shares

PPL Electric Utilities Corp. said Thursday that it called all 10 million of its 6.25% preference shares.

The preference shares trade in the form of $25.00 depositary shares, each of which represents one-fourth of a preference share. The depositary shares (OTCBB: PLEUK) were unchanged at $25.05 but in above-average trading. The volume was nearly 648,000 shares.

The Lehigh Valley, Pa.-based electric company will redeem the preference shares at $100.00 each. There will be no accrued or unpaid dividends paid out on the redemption date, which is June 18.

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