Midday Commentary: Wells Fargo added to calendar, could signal more to come

By Stephanie N. Rotondo

Phoenix, July 15 - The primary preferred stock market began the week with a new deal being talked around from Wells Fargo & Co.

The San Francisco-based bank said it was selling fixed-to-floating-rate series Q class A noncumulative perpetual preferreds.

A trader said initial price talk is 6% for 10 years, then a floating rate, which was "what everyone is looking for."

"It's still priced pretty cheaply," he said. "I think they could still squeeze it a little more."

The trader said there was "no selling group" on the deal, so it was "pretty tightly held."

He saw a gray market quote of $24.87 bid, $24.90 offered at midday.

The trader also commented that the emergence of the new issue could be a sign that there is more to come.

"We knew that there was a big bank deal that had been shelved a few weeks ago," he said, though he was not entirely sure it was the Wells deal specifically. "With this one going well, I'd think we'll be seeing more coming soon."

He added that the preferred market "has stabilized" after the disruption caused by worries about the end of the Federal Reserve's bond buying program, which is also a boon for the primary arena. "Some of the volatility is gone, which is good for new issues."

And, fund outflows have waned, another positive for the sector.

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