State Street frees, takes off; Allstate busy; Verizon's new $25-par notes list on NYSE

By Stephanie N. Rotondo

Phoenix, Feb. 26 - Preferred stocks were firming in the midweek trading session, as the Wells Fargo Hybrid and Preferred Securities index moved up 24 basis points.

The index closed the day up 21 bps, and a market source noted that volume was "modest."

Investors remained focused on State Street Corp.'s new $750 million issue of 5.9% series D fixed-to-floating rate noncumulative perpetual preferreds.

The deal priced Tuesday and had freed to trade by midday on Wednesday.

"It took off," a trader said, noting that he had seen bids for paper in a range of $25.30 to $25.50. The most recent market he saw was $25.40 bid, $25.45 offered.

Another source said the issue was trading between $25.40 and $25.50 all day.

The dividend will be fixed until March 15, 2024, at which time the dividend will begin to float at Libor plus 310.8 bps.

Price talk was originally around 6.25%.

The preferreds were sold as depositary shares representing a 1/4,000th interest.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Goldman Sachs & Co. and Wells Fargo Securities LLC were the joint bookrunners.

As for State Street's 5.25% series C noncumulative perpetual preferreds (NYSE: STTPC), that issue traded up 6 cents to $22.05.

The preferreds went ex-dividend on Wednesday, with holders receiving a payout of 32.81 cents per share.

Meanwhile, the Allstate Corp.'s $650 million of 6.625% series E noncumulative preferreds - a deal that came Monday - were seen at $24.85. That was flat from Tuesday levels, though a source noted that well over 3 million shares changed hands.

Among other recent deals, Verizon Communications Inc.'s $500 million of 5.9% $25-par notes due 2054 listed on the New York Stock Exchange, as expected.

The deal priced Jan. 30. The ticker symbol is "VZA."

Paper was trading at $24.85 at midday, versus opening levels of $24.89. At the close, the issue was at $24.87.

Away from recently priced deals, Royal Bank of Scotland Group plc's (NYSE: RBSPG) preferreds were the most actively traded securities of the day, with nearly 3.7 million shares being exchanged. The issue ended the day up 12 cents to $22.50.

According to one source, the Edinburgh, Scotland-based bank will release earnings on Thursday. What those numbers might look like was not clear.

"I'm sure there will be good news in there, and I am sure there will be bad news in there," the source said.

Also, General Growth Properties Inc.'s 6.375% series A cumulative redeemable preferreds (NYSE: GGPPA) closed at $23.13, down 7 cents on the day.

The Chicago-based real estate investment trust announced after the bell that it had declared a 39.84-cent dividend on the shares for April 1.

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