Preferred market turns higher; Vanguard sells preferred units; CHS offering upsized again

By Stephanie N. Rotondo

Phoenix, March 4 - A preferred stock trader said concerns about the Ukraine and Russia were waning Tuesday, resulting in an uptick in the markets.

"No one is scared of the big, bad wolf today," he said.

The Wells Fargo Hybrid and Preferred Securities index was up 20 basis points as of midday. However, by the end of the day the index gave some of those gains back, finishing up 11 bps.

Vanguard Natural Resources LLC announced plans to sell series B cumulative redeemable perpetual preferred stock units.

Price talk was 7.625% to 7.75%, according to a trader.

The company was expected to sell at least $75 million of the units. However, the deal came upsized at $175 million, priced at par to yield 7.625%.

"It was well received," a trader said, seeing the issue going out around $24.65.

There was also chatter that CHS Inc.'s planned sale of series B cumulative redeemable perpetual preferreds had priced.

A market source had previously told Prospect News that the company was out talking to investors and that once that was wrapped, the deal would come. He speculated Tuesday could be the day, adding that at the very least it would likely price this week.

CHS originally announced the deal on Feb. 12, planning to sell just $250 million of the preferreds. On Feb. 27, the company revised its prospectus, upping the offering to $350 million.

Late in the day, the company filed yet another S-1, registering an additional $70 million preferreds.

One trader said the deal had priced, though no details had emerged. He said the preferreds were already trading at par or above.

Among recently priced deals, the Allstate Corp.'s $650 million of 6.625% series E noncumulative perpetual preferreds were seen ticking up at $24.92 bid, $24.97 offered early in the day. Around mid-afternoon, a trader said that the greenshoe on the deal was fully exercised, adding $97.5 million preferred shares to the total.

Another market source noted that the issue was again among the day's most actively traded securities.

Southern California Edison Co.'s $275 million of 5.75% fixed-to-floating rate cumulative trust preference securities were meantime pegged at $25.20 bid, $25.23 offered.

Allstate priced Feb. 24. Southern California Edison came on Thursday.

In listed securities in the secondary, Wells Fargo & Co.'s preferreds were trading busily and better.

The 5.85% series Q fixed-to-floating rate noncumulative preferreds (NYSE: WFCPQ) moved up 3 cents to $24.80 and the 6.625% series R fixed-to-floating rate noncumulative preferreds (NYSE: WFCPR) gained 9 cents, closing at $26.85.

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