Preferred stocks firm; NextEra Energy prices upsized deal; recent deals list on NYSE

By Stephanie N. Rotondo

Seattle, May 31 – Preferred stocks were ticking higher in the final trading session of the month.

The Wells Fargo Hybrid and Preferred Securities index ended up 8 basis points. The index was up 4 bps at midday.

However, a trader noted that activity was somewhat muted.

“I think everybody is recovering from the long weekend,” he said.

The new issue space did see one new deal, a $500 million offering of 5.25% $25-par junior subordinated debentures due 2076 from NextEra Energy Capital Holdings Inc.

The deal was upsized from $200 million and priced below the initial 5.375% to 5.5% price talk.

Once the deal launched, a trader quoted the issue at $24.70 bid, $24.80 offered. Toward the end of the day, another market source saw the paper offered at $24.83.

On the heels of the new issue, the 5% series J junior subordinated debentures due 2073 (NYSE: NEEPJ) retreated 27 cents, or 1.05%, to $25.45.

The new notes will be unconditionally and irrevocably guaranteed by NextEra Energy Inc.

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

Proceeds will be used to repay a portion of the company’s commercial paper and for other general corporate purposes.

NextEra is a Juno Beach, Fla.-based power provider.

New issues list on NYSE

Recently priced issues were seen hitting the New York Stock Exchange on Tuesday.

Government Properties Income Trust’s $300 million of 5.875% $25-par senior unsecured notes due May 1, 2046 were given a symbol, “GOVN.”

At mid-morning, the paper was trading at $24.85, down from opening levels around par. The issue closed at $24.95.

That issue priced May 19 via BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC.

Meanwhile, W.R. Berkley Corp.’s $290 million of 5.75% $25-par subordinated debentures due June 1, 2056 also began trading on the NYSE.

The ticker is “WRBPD.” The deal priced May 18 from Morgan Stanley, BofA Merrill Lynch, UBS and Wells Fargo.

The notes were seen at $24.88 at mid-morning, off from opening levels around $24.92. The preferreds managed to pare the losses, ending at $24.91.

As for deals that have yet to list, Hersha Hospitality Trust’s $175 million of 6.5% series D cumulative redeemable preferreds were quoted at $24.80 bid, $24.90 offered.

That issue came May 24, with Morgan Stanley, BofA, Raymond James & Associates Inc., Wells Fargo and Citigroup Global Markets Inc. running the books.

Fannie, Freddie churn higher

There continued to be a fair bit of action in Fannie Mae and Freddie Mac preferreds, even as the day’s broader volume was deemed “incredibly light” by a market source.

One trader said the GSEs’ preferreds were “all jumping up,” as judge Margaret Sweeney of the U.S. Court of Federal Claims has asserted that she wants to review all documents the government has been trying to keep sealed in regards to the Treasury’s “net worth sweep” of the agencies’ profits.

“It could be that she’s finding something disturbing,” one source said. “It could be good for preferred holders.”

While Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were up earlier in the day, by the bell they were unchanged at $4.46. Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS), however, ticked up 7 cents, or 1.52%, to $4.68.

In recent weeks, Sweeney has unsealed a number of documents that appear to show that the Treasury and the White House worked together more than previously reported in rationalizing the government’s takeover of a majority of Fannie and Freddie’s profits. Stakeholders – some of which have gone so far as to sue the government, deeming the sweep illegal – have eaten up the new information.

As a result, Fannie and Freddie preferreds have been edging ever higher.

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