Morning Commentary: Preferreds begin short week with firm tone; Wells Fargo plans new issue

By Stephanie N. Rotondo

Phoenix, Sept. 8 – Preferred stocks were modestly higher in early Tuesday trading as market players returned to their desks after the long Labor Day weekend.

The Wells Fargo Hybrid and Preferred Securities index was up 3 basis points at mid-morning.

Market players returned to find that Wells Fargo & Co. had added a deal to the new issue pipeline.

The San Francisco-based bank said it was selling at least $250 million of series V class A noncumulative perpetual preferreds, which are talked in a 6% to 6.125% range.

“It’s probably closer to 6%,” a trader said, seeing a $24.75 bid, $24.95 offered gray market quote.

Wells Fargo Securities LLC is the bookrunner. Joint lead managers include BofA Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co., UBS Securities LLC, RBC Capital Markets, Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC.

Proceeds will be used for general corporate purposes.

As for the company’s existing preferreds – most of which trade at a premium – they were drifting in on the heels of the new issue.

The 6% series T class A noncumulative perpetual preferreds (NYSE: WFCPT) were down 17 cents at $25.27 at mid-morning.

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