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Midday Commentary: CHS' new issue frees up; Vanguard not yet freed; primary primed to flow
By Stephanie N. Rotondo
Phoenix, March 5 - Preferred stocks were trading flat during early midweek trading.
But the primary market was not doing too badly, as CHS Inc.'s $365.22 million of 7.1% series 2, class B cumulative redeemable preferreds freed to trade.
The issue priced late Tuesday, though the deal had been expected since mid-February.
"It was very hot," a trader said, seeing the new issue already trading north of par.
He pegged the deal at $25.30 bid.
BofA Merrill Lynch and Wells Fargo Securities LLC are the joint bookrunners. Lead manager is D.A. Davidson & Co.
Dividends will be payable on the last day of March, June, September and December. Beginning March 31, 2024, the dividend will be calculated on a floating-rate basis at Libor plus 429.8 basis points.
Meanwhile, Vanguard Natural Resources LLC's $175 million of 7.625% series B cumulative redeemable perpetual preferred units - another deal that priced Tuesday - had yet to free up, according to the trader.
He quoted the issue at $24.65 bid, $24.70 offered.
Joint bookrunners were Morgan Stanley & Co. LLC, UBS Securities LLC, Barclays, Stifel Nicolaus & Co., Credit Suisse Securities (USA) LLC and MLV & Co. LLC.
The trader also mentioned that JPMorgan Chase & Co. had launched a $1,000-par fixed-to-floating rate deal, though there were no details out as of midday.
He said price talk was 6.125% to 6.25%.
The trader also opined that the preferred space could see decent deal flow in the coming months.
"Preferreds have tightened dramatically since the beginning of the year," he said. That makes for a good environment to raise capital in, he added.
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