Morning Commentary: Recent preferred deals active; First Republic adds new issue to pipeline

By Stephanie N. Rotondo

Seattle, Feb. 3 – A preferred stock trader said recently priced deals were under “some selling pressure” in midweek trading.

Bank of America Corp.’s $1 billion of 6.2% series CC non-cumulative perpetual preferred stock (NYSE: BACPC) was pegged at $25.30 early in the session, while Wells Fargo & Co.’s $875 million issue of 5.7% series W class A noncumulative perpetual preferred stock (NYSE: WFCPW) was seen at $25.05.

The BofA deal came Jan. 21. Wells Fargo priced its preferreds on Jan. 19.

From last week’s business, Citigroup Inc.’s 6.3% series S noncumulative preferreds were quoted at $24.95 bid, par offered.

Those preferreds came Jan. 26, with $900 million shares being sold. On Monday, a market source reported that the greenshoe was exercised, lifting total issuance to $1.35 billion.

The paper is trading under a temporary ticker, “CTGGP.”

Despite the weakness seen in the newer issues, First Republic Bank said it planned to price at least $100 million of series G noncumulative perpetual preferreds.

The deal came after traders reported rumors of a regional bank deal on Tuesday.

Price talk for the dividend is in the 5.5% to 5.625% area, according to a market source.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are running the books.

A trader saw a $24.60 bid for paper in the early gray market.

Overall, the market had a softer tone yet again, even as oil prices sought to rally.

The Wells Fargo Hybrid and Preferred Securities index was down 18 basis points at mid-morning. For its part, domestic crude oil was up nearly 2.5% as Bloomberg reported that analysts were expecting a significant price rebound by the end of 2016 and others were hoping Russia and OPEC could come to terms on a plan to cut production.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.