Morning Commentary: Preferreds trade off with broader markets; CoBank, State Street stay strong

By Stephanie N. Rotondo

Seattle, April 7 – The preferred stock market turned south Thursday, as global economic concerns pressured the broader markets.

The Wells Fargo Hybrid and Preferred Securities Index was off 16 basis points at mid-morning.

But while the preferred space was heading lower, recently priced deals were holding their ground.

A trader said CoBank ACB’s $375 million of 6.25% $1,000-par fixed-to-floating rate perpetual preferreds – a deal from late Tuesday – were “still” trading around 100.875.

JPMorgan Securities LLC and Morgan Stanley & Co. LLC ran the books.

The dividend is fixed until Oct. 1, 2026, at which point it will begin floating at Libor plus 466 bps.

The Denver-based national cooperative bank will use proceeds to increase regulatory capital, pursuant to Farm Credit Administration regulations. Funds could also be used for general corporate purposes.

Meanwhile, State Street Corp.’s $500 million of 5.35% series G fixed-to-floating rate noncumulative preferreds were “still bid strong” at $25.60, with offers seen at $25.70. However, a trader noted that “very little is offered out there.”

Morgan Stanley, UBS Securities LLC, BofA Merrill Lynch and Wells Fargo Securities LLC led that deal, which came Monday. The deal has a temporary symbol, “SSTTP.”

As for recently listed issues, Torchmark Corp.’s $300 million of 6.125% $25-par junior subordinated debentures due June 15, 2056 (NYSE: TMKPC) were seen ticking up 3 cents to $25.13.

The deal priced March 29, coming upsized from $150 million.

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