Preferred stocks trend up; SunTrust prices $1,000-par deal; NuStar dominates trading

By Stephanie N. Rotondo

Seattle, April 27 – The preferred stock market was “just following the markets higher” on Thursday, a market source remarked on Thursday.

The Wells Fargo Hybrid and Preferred Securities Index was up 20 basis points, while the U.S. iShares Preferred Stock ETF was up 13 bps.

The primary space had a deal hit the tape as SunTrust Banks Inc. brought $750 million of 5.05% $1,000-par series G fixed-to-floating rate noncumulative preferreds.

Initial price talk was 5.25%

Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley & Co. LLC and SunTrust Robinson Humphrey ran the books.

Dividends will be fixed until June 15, 2022 and will be paid semi-annually. After that, the rate will float at Libor plus 310.2 bps and will be paid on a quarterly basis.

The preferreds are callable at par on any dividend date beginning June 15, 2022.

The new securities will not be listed.

Proceeds will be used for general corporate purposes.

Meanwhile, the secondary wasn’t trading as actively as it has been, a trader noted. The focus continued to be on recently priced deals.

NuStar Energy LP’s $350 million of 7.625% series B fixed-to-floating rate cumulative redeemable preferred units – a deal priced Tuesday – finished the session at $25.35, a gain of a dime day over day. But the paper gyrated wildly throughout Thursday’s session, hitting a low of $24.28 and a high of $25.46.

The units were quoted at $25.22 bid, $25.26 offered in early trading.

The units were also the day’s most actively traded security, beating out Wells Fargo & Co.’s $600 million of 5.625% $25-par series Y class A noncumulative perpetual preferred stock (NYSE: WFCPrY), another recently priced deal.

NuStar is trading under a temporary ticker, “NUSRP.”

As for the Wells Fargo issue, it closed at $25.01, up 3 cents.

That new issue has consistently been topping the charts since pricing on April 17. But come Thursday, the preferreds were slightly sidelined, not only by the NuStar units, but also by Morgan Stanley & Co. Inc.’s 5.85% series K fixed-to-floating rate noncumulative preferred stock (NYSE: MSPrK), which ticked up 8 cents to $26.35.

There was no fresh news out to cause the move in the Morgan Stanley issue, however.

Rounding out the recent deals, Qwest Corp.’s $575 million of 6.75% $25-par notes due 2057 are expected to list on the New York Stock Exchange “any day now,” according to one trader.

That could come as soon as Friday, he said. The expected symbol is “CTDD.”

Leading up to listing, the notes were seen holding around $24.85.

The deal priced April 18.

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