Another weak day for preferreds; BGC declines heavily; three new issues announced, one priced

By Stephanie N. Rotondo

Phoenix, Nov. 14 - It was an "ugly day in paradise," a market source said of Wednesday's preferred stock market.

"There could be a lot of things going on here," he said of the declines, pointing specifically to ongoing concerns about Europe and the looming fiscal cliff in the United States.

A preferred stock trader said that mortgage-backed preferreds specifically have been taking hits of late.

"I don't know if it's profit-taking or if people are scared of mortgages," the trader said. He noted that such paper has fallen because of inflation fears and worries that companies based on anything mortgage related were over-leveraged.

Of such companies, Invesco Mortgage Capital Inc. - an investor in mortgage-backed securities - saw its 7.75% series A cumulative redeemable preferreds fall 21 cents by midday to $25.04.

BGC Partners Inc.'s preferreds experienced a massive backslide during the midweek trading session. The movement was deemed "the big mystery of the day" by one source who noted that there was no news out to drive it, "as far as we can tell."

Meanwhile, in the primary, three new issues were announced.

NextEra Energy Capital Holdings Inc. said it was selling series I junior subordinated debentures due Nov. 15, 2072.

The $25-par issue was talked at 5.125% to 5.25%, according to a trader. The deal came after the close, with $600 million of notes priced at 5.125%.

Taylor Capital Group Inc. meantime said it intended to price an offering of at least $100 million series A noncumulative perpetual preferreds.

Price talk is around 8%, a trader reported.

And, Prudential Financial Inc. heralded plans to issue $1,000-par fixed-to-floating rate subordinated notes due June 15. 2043.

A trader said he had not seen any talk on that deal.

"With the Wells Fargo [& Co. issue that priced Tuesday] and NEE Capital coming out, they may wait until [Thursday to bring the deals]," the trader said.

Neither deal had come as of press time.

BGC notes tumble

The amount of trading and massive downward movement resulted in BGC Partners' 8.125% $25-par senior notes due 2042 being called the big mystery of the day.

The issue (NYSE: BGCA) dropped $1.37, or 5.52%, to $23.35, with over 421,000 notes changing hands.

"Of paying securities, they were one of the largest percentage losers of the day," a market source said.

The source went on to say that he had not seen any news that could have caused the heavy loss, though he did note that Moody's Investors Service had pulled its ratings on the company last week. However, the company is still rated by Standard & Poor's, he said, so that alone should not have caused such a crash.

NextEra prices $25-par notes

NextEra Energy Capital Holdings brought $500 million of 5.125% $25-par series I junior subordinated debentures due Nov. 15, 2072 on Wednesday.

The notes will be unconditionally and irrevocably guaranteed by NextEra Energy Inc.

"It will probably price today," a trader said at midday, seeing the issue at $24.75 in the gray market.

After the close but before pricing, another market source saw a gray market of $24.85.

The notes feature a make-whole clause in the event of an early redemption or a take out at 102% of par in the case of a rating agency event.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. Inc., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used to repay commercial paper obligations and for general corporate purposes.

NextEra is a Juno Beach, Fla.-based power provider.

Wells Fargo deal frees

Concerning the new Wells Fargo issue - a $600 million offering of 5.125% series O noncumulative perpetual class A preferreds - a trader said the issue was "seconds" from freeing up around noon ET, trading in a $24.64 to $24.67 context.

After the bell, a market source said the deal had in fact freed to trade, though he called the issue "quite a pig."

When the issue first freed, it was trading at $24.70 bid, $24.77 offered. By the end of the day, it had moved up to $24.72 bid, the source said.

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