State Street gives details on new issue; Sotherly prices $25-par notes; CoBank prices

By Stephanie N. Rotondo

Phoenix, Nov. 19 – Preferred stocks were trading with a firm tone on Wednesday, helping to lessen the late-day losses from the previous session.

The Wells Fargo Hybrid and Preferred Securities Index ended the day up 9 basis points. It closed down 16 bps on Tuesday.

State Street Corp. released details on its offering of series E noncumulative perpetual preferreds early Wednesday. The company sold $750 million of the preferreds at par to yield 6%.

Initial price talk was 6.125% to 6.25%.

A trader said the issue had freed to trade early in the session, quoting it at $24.90 bid, $24.95 offered.

After the bell, another market source said there was “a lot of activity” in the new deal, seeing the paper close at $24.90.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC were the joint bookrunning managers.

Sotherly Hotels LP also put out details on its sale of $25-par senior notes due 2019.

The offering was announced Nov. 12 and priced late Tuesday.

The notes came at 7%, and $25.3 million were sold.

A trader said he saw the paper offered at $24.60 at mid-morning.

Sandler O’Neill + Partners LP was the bookrunner. Boenning & Scattergood Inc., J.J.B. Hilliard, W.L. Lyons, LLC, Incapital LLC and Ladenburg Thalmann were the co-managers.

In newly announced deals, CoBank ACB sold $300 million of 6.2% fixed-to-floating rate perpetual preferreds.

Price talk on the $100-par issue was around 6.5%, according to a market source.

Another source quoted the issue at 100.25 bid, 100.375 offered.

BofA Merrill Lynch, J.P. Morgan Securities LLC and Morgan Stanley were running the deal.

The interest rate will be fixed until Jan. 1, 2025, at which time it will begin floating at Libor plus 374.4 bps.

The paper is non-callable for 10 years.

RBS active, mostly higher

Royal Bank of Scotland Group plc’s preferreds were on the active side and mostly trending toward the up side in midweek trading.

Of the most actively traded issues in the bank’s structure, the series E securities (NYSE: RBSPE) finished 3 cents higher at $24.35, while the series Gs (NYSE: RBSPG) closed unchanged at $24.51.

The Edinburgh, Scotland-based bank is reportedly getting slapped with a £50 million fine from banking regulators on Thursday. The fine is due to a computer error in 2012 that left customers unable to access their accounts for several days.

Irish regulators levied a £2.7 million fine last week for the same problem.

The latest fine comes on the heels of a £400 million fine – also announced last week – in regards to RBS’ part in a foreign currency exchange probe.

However, one market source said he didn’t think the day’s activity had much to do with the latest penalty RBS has suffered.

“It’s not uncommon for those to be active,” he noted, adding that the news was “not dramatic” and that the company’s legal risks were “well known.”

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