Midday Commentary: First Republic on tap; NextEra, Wells Fargo trade in amid weakness

By Andrea Heisinger

New York, Nov. 15 - Another new preferred stock offering was announced on Thursday - this time from First Republic Bank - as the market awaited the pricing of shares from Taylor Capital Group Inc. and watched how other recently priced offerings performed in trading.

Taylor Capital is expected to price at least $100 million of series A noncumulative perpetual preferreds. Price talk remained at about 8% on Thursday morning, a trader said, the same as guidance given on Wednesday when the offering was announced.

San Francisco-based First Republic Bank announced plans to sell $25-par perpetual noncumulative series C preferred stock in a news release on the company's website Thursday.

The shares are being talked in the 5.625% area, a trader said at midday.

Pricing could take place late on Thursday, he added.

"They already launched it so I would think they'd try to push it through today," the trader said.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, Goldman Sachs & Co. and J.P. Morgan Securities LLC are the bookrunners.

First Republic intends to list the shares on the New York Stock Exchange under the symbol "FRB-PrC."

Proceeds will be used for general corporate purposes, including funding loans or buying investment securities for portfolios.

There was activity in preferred trading.

The new 5.125% $25-par series I junior subordinated debentures from NextEra Energy Capital Holdings Inc. were seen in trading, a source said.

The notes due Nov. 15, 2072 were quoted at $24.47 to $24.62 as of midday. The deal priced at the tight end of talk, pricing $500 million of notes after the close Wednesday.

And, Prudential Financial Inc. gave the terms of its $1.5 billion sale of 5.625% $1,000-par fixed-to-floating rate subordinated notes due June 15, 2043.

The notes were not seen trading as of midday, a trader said.

Also, the new issue from Wells Fargo & Co. priced earlier in the week was seen trading a $24.72, the trader added. The $600 million of 5.125% perpetual noncumulative series O preferreds priced on Tuesday at par of $25.00.

The tone of the preferred stock market, which had suffered along with equities on Wednesday, continued to be soft on continued worries about the fiscal cliff and unrest in the Middle East, the trader said.

"A lot of things that were weaker [Wednesday] still are," he said. "Any REITs - anything tied to mortgages - took a beating yesterday."

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