Entergy Mississippi sells $260 million $25-par first mortgage bonds; Associated Banc firms

By Stephanie N. Rotondo

Seattle, Sept. 8 – The preferred stock new issue pipeline continued to flow on Thursday with Entergy Mississippi Inc.’s issuance of $25-par first mortgage bonds due 2066.

The company priced $260 million of the bonds at par to yield 4.9%, tight to the 4.95% price talk.

“They should grow it to a decent size,” a trader said ahead of pricing, noting that the proceeds would be used to redeem the company’s 6.25% preferreds, as well as its 6% and 6.2% first mortgage bonds.

The trader saw the issue at $24.84 bid, $24.90 offered in the early gray market. At the close, another market source saw the paper at $24.88 bid, $24.90 offered.

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

As for the issues up for redemption, the 6% bonds (NYSE: EMZ) fell 18 cents to $25.30, while the 6.2% bonds (NYSE: EFM) declined 51 cents, or 1.58%, to $25.50.

From Wednesday’s business, Associated Banc-Corp’s $100 million of 5.375% series D noncumulative preferreds had not yet freed as of mid-morning, according to a trader. But that wasn’t stopping the paper from “ripping,” he said.

He pegged the preferreds at $25.20 bid, $25.25 offered.

“Things are just getting really tight, and there is not enough supply around,” he said. With the amount of redemptions done in the last month, both individual investors and ETFs are looking to refill their portfolios and are having to fight over the same scraps.

“So it’s a good time to bring new issues,” he said.

The Associated Banc preferreds did eventually free by day’s end, going out at $25.38 bid, according to a source.

As for Tuesday’s deals, Monmouth Real Estate Investment Corp.’s $135 million of 6.125% series C cumulative redeemable preferreds freed to trade early in the session, a trader reported.

That issue was trading “right around par,” the trader said.

Also from Tuesday, KeyCorp’s $525 million of 5% $1,000-par fixed-to-floating rate noncumulative preferreds were seen at 100.25 bid, 100.375 offered at mid-morning and at 100.4 offered by the close.

Looking ahead, the calendar is expected to remain active.

“I think we should stay relatively busy for the foreseeable future, on the new issue front at least,” a trader remarked.

Banks busy

In listed issues, Morgan Stanley & Co. Inc. and JPMorgan Chase & Co. dominated the day’s trading landscape.

Wells Fargo & Co. also made an appearance.

Among Morgan Stanley’s various issues, the floating-rate series A noncumulative preferreds (NYSE: MSPA) rose 12 cents to $22.99, while the 6.625% series G noncumulative preferreds (NYSE: MSPG) improved 3 cents to $27.81.

However, the 6.875% series F fixed-to-floating rate noncumulative preferreds (NYSE: MSPF) dropped 8 cents to $30.00 a share.

In JPMorgan paper, the 6.125% series Y noncumulative preferreds (NYSE: JPMPF) slid 2 cents to $27.84, as the 6.3% series W noncumulative preferreds (NYSE: JPMPE) gained 11 cents to close at $27.79.

The 5.5% series O noncumulative preferreds (NYSE: JPMPD) were also better, gaining a penny to close at $26.22.

Wells Fargo’s 6% class A series V noncumulative preferreds (NYSE: WFCPV) were meantime 8 cents weaker at $27.77.

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