New preferreds from CHS, Wells Fargo trade up; activity mostly quiet ahead of holiday

By Christine Van Dusen and Stephanie Rotondo

Atlanta, Jan. 16 – The new and well-liked issue from CHS Inc. traded up on an otherwise mostly quiet Friday for the preferred stock market while the Standard & Poor’s banking index rebalanced.

The market also appeared to slow down ahead of the Martin Luther King Jr. holiday on Monday.

Minnesota-based agricultural company CHS on Tuesday priced $450 million 7.5% class B series 4 cumulative redeemable preferreds, upsized from $250 million and talked at 7.5% to 7.625%.

The preferreds – which traded at $24.90 bid, par offered early on Tuesday – were seen Friday morning between $25.25 and $25.35, a trader said.

The non-rated deal came via BofA Merrill Lynch and Wells Fargo Securities LLC.

A trader said that CHS’ 7.875% series 1 class B cumulative redeemable preferreds (Nasdaq: CHSCO) have been trading around $28.16, with a 7.02% yield. On Friday the notes closed at $28.00, up 32 cents on 79,421 shares traded.

The new $2 billion 5.875% $1,000-par series U class A fixed-to-floating rate noncumulative perpetual preferreds that San Francisco-based Wells Fargo & Co. priced on Thursday moved higher in trading on Friday, the trader said.

After being quoted at 100.625 bid, 100.875 offered prior to pricing, the stock moved to about 101, he said.

Dividends will be paid on a semiannual and fixed basis through June 15, 2025. From then, the dividend will be paid quarterly at a rate of Libor plus 399 basis points.

The preferreds become redeemable at par plus accrued dividends on or after June 15, 2025. The company can redeem the preferreds prior to that date upon a regulatory capital treatment event.

The new securities will not be listed.

Proceeds will be used for general corporate purposes.

Elsewhere in the preferred stock market universe, “there’s not too much going on, with the holiday coming up,” the trader said.

On Friday afternoon, ING Groep NV’s 7.375% ING Perpetual Capital Securities traded down 5 cents to $25.69 on 215,695 shares traded.

RBS Capital Funding Trust VII’s 6.08% noncumulative guaranteed trust preferred securities dipped 14 cents to $24.29 on 179,366 shares traded.

And Barclays Bank plc’s 8.125% non-cumulative callable dollar preference shares series 5 ADR rose 11 cents to $26.27 on 174,521 shares traded.

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