Midday Commentary: Recent preferred deals hang in; secondary market slips after week's run up

By Stephanie N. Rotondo

Phoenix, April 25 - New preferred stock issues were "just sitting there" in Friday trading, according to a trader.

"Nothing is moving," he said.

Regions Financial Corp.'s $500 million of 6.375% series B fixed-to-floating rate noncumulative preferreds - a deal that came Thursday - was trading off a bit, the trader said, seeing a $24.70 bid getting hit.

"That's probably the managers," he said.

The trader also remarked that he thought the deal was "priced a little aggressively compared to what else is out there."

From Wednesday's business, Citigroup Inc.'s $1.75 billion offering of 6.3% $1,000-par series M fixed-to-floating rate noncumulative preferreds was pegged at 99.75 bid, 99.875 offered.

Morgan Stanley & Co. Inc.'s $500 million of 6.625% $25-par series G noncumulative perpetual preferred stock was "hanging just below par," the trader said, trading around $24.95.

As for the bank's $1.3 billion of 5.45% 1,000-par series H fixed-to-floating rate noncumulative perpetual preferreds, there hasn't been much trading in that issue, the trader reported. He said that the last market he saw for the shares was "locked" at 100.75. He speculated that the paper was holding in a 100.25 to 100.75 range on Friday.

Both deals came Tuesday.

And rounding out the week's deals, Goldman Sachs Group Inc.'s $700 million of 6.375% $25-par series K fixed-to-floating rate noncumulative perpetual preferreds was steady around $25.10, according to the trader. The $1.3 billion of 5.7% $1,000-par series L fixed-to-floating rate noncumulative perpetual preferreds was around 102.

The Goldman deals priced Monday.

The trader said that, looking forward, he expected demand to stay high and the pipeline to be pretty heavy.

"This stuff was soaked up so fast," he said. "Nobody was getting shares aside from the leads."

The preferred stock market in general was a little weaker as of mid-morning, after trading modestly higher all week.

The Wells Fargo Hybrid and Preferred Securities Index was down 2 basis points.

© 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.