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Morning Commentary: Market skids as week starts; SoCal Edison, Capital One add deals to calendar
By Stephanie N. Rotondo
Phoenix, Aug. 17 – Preferred stocks were following the straight equity markets downward after the Empire State manufacturing index showed a sharp contraction in August.
The Wells Fargo Hybrid and Preferred Securities index was off 10 basis points at mid-morning.
The manufacturing index declined to 14.9 in August, which compared to a positive reading of 3.9 in the previous month. The level is the lowest seen since April 2009.
The drop-off was attributed to a decline in new orders and shipments.
But while the market was kicking off the week with a softer tone, two new issues hit the tape early Monday.
Southern California Edison Co.’s SCE Trust IV is planning an offering of at least $300 million fixed-to-floating rate trust preference securities, the company said in a regulatory filing.
Capital One Financial Corp. also announced an offering of at least $250 million fixed-rate series F noncumulative preferreds.
No price talk was available for the Southern California Edison deal at mid-morning, but the Capital One issue was being talked in a 6.25% to 6.375% range.
A trader saw both issues bid for at $24.80 in the early gray market.
“Both deals will do well,” he said.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and RBC Capital Markets are leading the Southern California Edison deal, while BofA Merrill Lynch, JPMorgan, Morgan Stanley UBS Securities LLC and Wells Fargo Securities LLC are running the Capital One offering.
For its part, Southern California Edison will use the proceeds to redeem its series A floating-rate noncumulative preference shares (OTCBB: SCEDN).
That $100-par issue was trading down 25 cents at 100.75 early in the session.
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