Bank of America’s new deal frees, trades higher; CHS gains ground; Harvest Capital on tap

By Stephanie N. Rotondo

Phoenix, Jan. 21 – The preferred stock market was attempting to stem losses from the previous session in Wednesday trading.

The Wells Fargo Hybrid and Preferred Securities index ended the day 16 basis points higher. The index lost 19 bps in Tuesday trading.

Among new deals, Bank of America Corp.’s $1 billion of 6.5% series Y noncumulative perpetual preferreds were also ticking higher, according to market sources.

The preferreds ended the day at $24.79 bid, $24.85 offered, one source said, adding that the deal had freed from the syndicate shortly before the market closed.

The paper was quoted at $24.80 bid, $24.85 offered early in the day.

The deal came Tuesday, upsized from $250 million and tighter than the 6.625% initial price talk.

BofA Merrill Lynch ran the books.

As for the bank’s other outstanding preferred issues, they were initially looking to recover ground lost on the heels of the new issue. However, the structure finished the session fairly evenly mixed.

The 6.625% series W noncumulative preferreds (NYSE: BACPW) – the most actively traded issue among BofA paper – was 2 cents weaker at $25.57. The 6% capital securities (NYSE: BACPZ) meantime put on 9 cents, closing at $25.60.

Meanwhile, CHS Inc.’s $450 million of 7.5% class B series 4 cumulative redeemable preferreds – a deal priced Jan. 13 – was also on the rise.

One source said the preferreds closed at $25.48, up 18 cents from the day before.

He saw the volume weighted average price at $25.44.

Another trader had pegged the preferreds at $25.30 bid, $25.40 offered at mid-morning.

The preferreds are slated to list on the Nasdaq Global Select Market on Thursday under the ticker symbol “CHSCL.”

That trader remarked that at least one more new issue was slated for the week, likely from a business development company.

Sure enough, as the day came to an end Harvest Capital Credit Corp. announced plans to sell $25 million of $25-par notes due 2020.

That deal is being led by Keefe Bruyette & Woods Inc. and Janney Montgomery Scott LLC.

Capital One earnings ahead

Capital One Financial Corp.’s preferreds were on the active side ahead of the company’s earnings release on Thursday.

Though analysts on average are projecting an 18% increase in profit, the preferreds were weaker on the day.

The 6.25% series C noncumulative perpetual preferreds (NYSE: COFPC) dropped 6 cents to $25.03, while the 6.7% series D noncumulative perpetual preferreds (NYSE: COFPD) declined 17 cents to $26.25.

For the fourth quarter, Capital One is expected to report earnings per share of $1.74, according to Zacks Consensus Estimate. The year before, earnings were $1.48 per share.

However, revenue is projected to be 4% lower at $5.7 billion.

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