Midday Commentary: Allstate launches first new deal of 2013; redemptions kicking in

By Stephanie N. Rotondo

Phoenix, Jan. 3 - The new issue calendar was already starting up for 2013, as Allstate Corp. announced a $25-par notes sale on Thursday.

The company said it planned to issue at least $500 million of the fixed-to-floating-rate notes - talked at 5.25% - due 2053, with J.P. Morgan Securities LLC leading the deal.

"There's no selling group, just the underwriters, so that could bring some other people in," a trader said, seeing the issue at $24.75 in the gray market as of midday.

"It's going to get done quickly," the trader said.

The trader also noted that he was surprised a deal had come so soon, but opined that issuance should really start to heat up come Monday.

Meanwhile, the preferred market was seeing a fair bit of redemption activity as the new year kicked off.

On Wednesday, both Wells Fargo & Co. and Duke Energy said they would redeem preferred securities in early February. Wells is calling three trust preferred issues - perhaps the first of many such calls in 2013, given new financial regulations regarding tier I capital requirements - while Duke is calling a quarterly income preferred issue.

All issues will be called at par plus accrued dividends.

Market sources recently speculated to Prospect News that issuers - particularly banks - intend to take advantage of currently low interest rates as they look to redeem other higher coupon issues. Banks are expected to be highly active in both the redemption and new issue spaces as they call TruPS and replace them with new money.

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