Principal Financial prices $1,000-par notes at 4.7%; Freddie Mac preferreds soften

By Stephanie N. Rotondo

Phoenix, May 4 – The primary preferred stock market was showing signs of life on Monday as Principal Financial Group Inc. brought $400 million of 4.7% $1,000-par fixed-to-floating rate junior subordinated notes due 2055.

The company announced plans to sell the hybrid notes early in the session, and a trader said initial price talk was in the 4.875% area.

“That just seems really rich, but they will probably get it,” he said.

The trader had not seen any gray markets for paper at mid-morning.

BofA Merrill Lynch, HSBC, Wells Fargo Securities LLC, Barclays, Deutsche Bank Securities Inc. and Goldman Sachs & Co. are running the books.

The interest rate will be fixed and payable semiannually through May 15, 2020. The notes will then pay interest on a floating-rate basis – Libor plus 304.4 basis points – and will be payable quarterly.

The Des Moines-based insurance company plans to use proceeds to redeem its outstanding 5.563% series A noncumulative perpetual preferreds (OTCBB: PFGZP), as well as its 6.518% series B noncumulative perpetual preferreds (NYSE: PFGPB).

By the bell, the series As were up $1.14, or 1.14%, at 100.94, while the Bs were off 7 cents at $25.36.

Meanwhile, Freddie Mac preferreds were coming in Monday as investors readied for the agency’s first-quarter earnings release on Tuesday.

The 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were off 3 cents at $5.00 a share.

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