Midday Commentary: New preferred issues main focus of investors; Protective Life plans sale

By Stephanie N. Rotondo

Phoenix, Aug. 15 - A preferred stock trader said it was "busy as far as new issues go" on Wednesday, though the "secondary market is off a hair, but not too much."

The new issue calendar remained active. Protective Life Corp. announced plans for a sale of $25-par subordinated debentures due Sept. 1, 2042.

Price talk is 6% to 6.125%, according to a trader. He added that the company said it plans to sell a minimum of 4 million notes, "but obviously they'll grow that. They always throw out a random low number."

He noted that the paper "seems to be doing fine" in the gray market, seeing the issue at $24.75 bid.

Wells Fargo Securities LLC, Bank of America Merrill Lynch and Barclays are the joint bookrunners.

Proceeds will be used to redeem $125 million of outstanding 7.25% capital securities due 2066 and for general working capital purposes.

The 7.25% securities (NYSE: PLPD) were down 7 cents at $25.28.

Other recent deals were seeing a fair bit of play as well.

Capital One Corp.'s $875 million 6% series B fixed-rate noncumulative perpetual preferreds from late Monday were seen at $24.80 bid, $24.85 offered, according to a trader.

"There's not as much action as I thought there would be," he said, speculating that the recent onslaught of new issues might be leaving investors "full." "It looked pretty good, especially since it came with a six handle. I'm surprised it's not trading at par already."

The deal freed to trade on Tuesday.

Also, State Street Corp.'s $500 million sale of 5.25% series C noncumulative perpetual preferred stock inched up to $24.95 bid, a trader said. The deal priced Tuesday.

Morgan Stanley & Co. LLC, Bank of America Merrill Lynch, Goldman Sachs & Co., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers for the State Street deal.

Proceeds will be used to redeem all of the company's outstanding series A preferred stock from State Street Capital Trust III. The trust will then redeem all outstanding 8.25% fixed-to-floating-rate normal automatic preferred enhanced capital securities and all of its outstanding common securities.

The redemptions require approval from the Federal Reserve. If approval is not secured, the company will use proceeds for general corporate purposes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.