Protective Life prices $25-par 30-year notes; State Street heads upward; Capital One nears par

By Stephanie N. Rotondo

Phoenix, Aug. 15 - A preferred stock trader said it was "busy as far as new issues go" on Wednesday, though the "secondary market is off a hair, but not too much."

"It was a sloppy, soft, slow day in the secondary," a second trader said.

The new issue calendar remained active. Protective Life Corp. announced a sale of $25-par subordinated debentures due Sept. 1, 2042. The deal came after the bell as a $150 million offering at 6%, the low end of talk.

Meanwhile, State Street Corp.'s new $500 million sale of 5.25% series C noncumulative perpetual preferred stock inched up in midweek trading.

Protective Life prices issue

Protective Life announced and then priced an offering of $25-par 30-year notes on Wednesday.

Price talk was initially 6% to 6.125%, according to a trader. He added that the company said it planned to sell a minimum of 4 million notes, "but obviously they'll grow that. They always throw out a random low number."

At midday, he estimated the deal would grow to about 10 million notes, but only 6 million, or $150 million, were eventually sold.

He noted that the paper "seems to be doing fine" in the gray market ahead of pricing, seeing the issue at $24.75 bid.

Wells Fargo Securities LLC, Bank of America Merrill Lynch and Barclays are the joint bookrunners.

Proceeds will be used to redeem $125 million of outstanding 7.25% capital securities due 2066 and for general working capital purposes.

The 7.25% securities (NYSE: PLPD) were down 6 cents at $25.29.

State Street rises

State Street's new 5.25% series C preferreds were heading higher, a trader said, pegging the issue at $24.95 bid. The deal priced Tuesday.

Morgan Stanley & Co. LLC, Bank of America Merrill Lynch, Goldman Sachs & Co., UBS Securities LLC and Wells Fargo are the joint bookrunning managers.

Proceeds will be used to redeem all of the company's outstanding series A preferred stock from State Street Capital Trust III. The trust will then redeem all outstanding 8.25% fixed-to-floating-rate normal automatic preferred enhanced capital securities and all of its outstanding common securities.

The redemptions require approval from the Federal Reserve. If approval is not secured, the company will use proceeds for general corporate purposes.

Capital One nears par

Capital One Financial Corp.'s $875 million 6% series B fixed-rate noncumulative perpetual preferreds from late Monday were seen at $24.80 bid, $24.85 offered on Wednesday, according to a trader.

"There's not as much action as I thought there would be," he said, speculating that the recent onslaught of new issues might be leaving investors "full." "It looked pretty good, especially since it came with a six handle. I'm surprised it's not trading at par already."

The deal freed to trade on Tuesday.

Wells Fargo deal hangs in

Wells Fargo & Co.'s 5.2% class A noncumulative perpetual preferred stock, series N, was hanging around a $25.05 level, a trader reported.

Another trader said the issue was sticking in a par-to-$25.05 range.

The deal priced Aug. 9 and was upsized to $675 million from $250 million.

The new issue had traded up post-pricing, but it has come back in recent days to settle around par. Some traders have lamented the deal, pointing to the low coupon.

Settlement is expected Thursday.

Proceeds will be used for general corporate purposes, including investments in or advances to existing or future subsidiaries, repayment of obligations that have matured and reducing outstanding commercial paper and other debt.

Wells Fargo is a financial services company based in San Francisco.

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