American Homes prices; Qwest frees to trade; Wells Fargo comes in; Morgan Stanley gains

By Stephanie N. Rotondo

Seattle, April 19 – The preferred stock new issue market was showing no signs of letting up on Wednesday as American Homes 4 Rent emerged to tap the primary.

The Agoura Hills, Calif.-based real estate investment trust sold $150 million of 5.875% series F cumulative redeemable preferred stock. The deal came upsized from $100 million and at the tight end of the 5.875% to 6% price talk.

A market source said the last gray market quote for the paper was $24.80 bid, $24.85 offered. The paper was seen at $24.70 bid in the early gray market.

BofA Merrill Lynch, Raymond James & Associates Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are running the books.

Proceeds will be used to pay down debt.

American Homes’ existing 5.5% series C cumulative participating preferred shares (NYSE: AMHPrC) declined in the wake of the new issue, as did most of the company’s other outstanding preferreds.

The series Cs dropped 35 cents, or 1.23%, to $28.10.

From Tuesday’s business, Qwest Corp.’s $575 million of 6.75% $25-par notes due 2057 freed to trade by the end of the day, according to one source.

The source placed the issue at $24.78 at the close.

Another trader said the issue was quoted at $24.70 bid, $24.77 offered in early dealings.

BofA Merrill Lynch, Morgan Stanley, RBC Capital Markets and Wells Fargo led that deal, which came upsized from $250 million and in line with price talk.

The company plans to use some of the proceeds from the sale to redeem all of its outstanding 7.5% $25-par notes due 2051 (NYSE: CTW). Since that was announced, those notes have been weaker, falling 2 cents in midweek trading to $25.27.

Wells Fargo & Co.’s $600 million issue of 5.625% series Y class A noncumulative preferreds meantime closed at $25.05, which was off a nickel for the day.

In earlier dealings, the preferreds were pegged at $25.06 bid, $25.10 offered.

The Wells Fargo-led offering came Monday, pricing upsized from $250 million and tighter than the 5.875% price talk. The deal then freed to trade on Tuesday and was also assigned a temporary trading symbol, “WFGGP.”

Morgan Stanley beats

Morgan Stanley & Co. Inc.’s 5.85% series K fixed-to-floating rate noncumulative preferreds (NYSE: MSPrK) inched upward on Wednesday after the New York-based bank announced first-quarter results that beat expectations.

The preferreds rose 2 cents to $26.30.

The company saw total profit jump 74% year over year, as fixed income trading revenue nearly doubled.

On an adjusted basis, Morgan Stanley posted earnings per share of $1.00 on revenue of $9.75 billion.

Analysts polled by Thomson Reuters had forecast EPS of 88 cents on revenue of $9.27 billion.

Revenue from fixed-income trading came to $1.7 billion, compared to $873 million the year before. Investment banking revenue meantime popped about 40%, coming in at $1.55 billion.

The only negative was a slight dip in equity trading revenue. That fell to $2 billion versus $2.1 billion reported in the first quarter of 2016.

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