Morning Commentary: State Street adds $1,000-par hybrid to pipeline; Prudential notes free to trade

By Stephanie N. Rotondo

Phoenix, May 14 – The preferred stock market continued to climb higher as the Wells Fargo Hybrid and Preferred Securities index rose 33 basis points in early Thursday trading.

In primary dealings, the $1,000-par arena remained busy, as State Street Corp. announced plans for a benchmark offering of series F fixed-to-floating rate noncumulative perpetual preferreds.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities LLC are running the books.

A trader said he had yet to see any details or gray markets on the deal, opining that the market was waiting for Prudential Financial Inc.’s new $1 billion of 5.375% $1,000-par fixed-to-floating rate junior subordinated notes due 2045 to clear out of the way.

The Prudential issue priced late Wednesday, though details did not emerge until Thursday morning. A trader said the notes freed to trade early in the session, seeing the paper at 100.75.

Goldman Sachs, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Morgan Stanley, HSBC and Mizuho Securities were the bookrunners on that deal.

Among other recent $1,000-par issues, Capital One Financial Corp.’s $1 billion of 5.55% series E fixed-to-floating rate noncumulative perpetual preferreds – a deal that priced Monday via Barclays, Credit Suisse Securities, J.P. Morgan Securities LLC, Morgan Stanley, Wells Fargo Securities and Capital One Securities Inc. – were seen at 99.875.

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