Bank of New York Mellon prices $1 billion; Tsakos upsized; Ally up ahead of tender news

By Stephanie N. Rotondo

Phoenix, April 23 – The preferred stock market rebounded in Thursday trading, effectively erasing Wednesday’s losses.

The Wells Fargo Hybrid and Preferred Securities index closed 6 basis points better, though it was up 10 bps at mid-morning. The index ended Wednesday’s session off 5 bps.

Another new deal hit the tape early in the day, as the Bank of New York Mellon Corp. announced a sale of $1,000-par series E fixed-to-floating rate noncumulative perpetual preferreds.

The company sold $1 billion of the preferreds at par to yield 4.95%.

At the close, the new issue was pegged at 100.125 bid, 100.375 offered.

Ahead of pricing, a trader said he had yet to see price talk on the new issue, though he opined it could come in a 5% to 5.125% context.

Goldman Sachs & Co., Citigroup Global Markets Inc., UBS Securities LLC and BNY Mellon Capital Markets LLC are running the books.

The new issue came on the heels of the company’s earnings announcement on Wednesday in which the New York-based bank reported a 16% increase in profit.

For the quarter, net income was $766 million, or 67 cents per share. That compared to income of $661 million, or 57 cents per share, the year before.

Analysts polled by Bloomberg had predicted earnings per share of 59 cents.

Revenue rose 5.6% to $3.85 billion. The gain was attributed to higher fees in the investment services and money management units. Assets under management improved 1.8% to $1.74 trillion.

Additionally, the bank cut noninterest expenses by 1.4%.

As for the company’s 5.2% $25-par series C noncumulative perpetual preferreds (NYSE: BKPC), those finished the session off 17 cents at $25.26.

Meanwhile, Tsakos Energy Navigation Ltd. priced an $85 million offering of 8.75% series D cumulative redeemable preferred stock late Wednesday.

The non-rated deal was upsized from $50 million and came at the tight end of talk.

No markets were seen in early Thursday trading, according to a trader.

Morgan Stanley & Co. LLC and UBS Securities LLC are the joint bookrunners. Co-managers include Axia Capital Markets LLC, Evercore Group LLC, Brock Securities LLC and Seaport Global Securities LLC.

Despite the steadiness of the primary pipeline this week, liquidity has been constrained. Several market sources have attributed the lack of trading activity to the Women’s Syndicate Association’s annual cocktail reception, which will kick off Thursday evening in New York.

Ally tenders for preferreds

Ally Financial Inc. announced a tender offer for its 8.5% series A fixed-to-floating rate perpetual preferreds after the market closed Thursday.

Prior to the news, the preferreds (NYSE: ALLYPB) were trending higher, closing up 3 cents at $26.75. The 8.125% series 2 fixed-to-floating rate trust preferreds (NYSE: ALLYPA) traded much more actively and ended 2 cents better at $26.25.

The Detroit-based financial institution said that it would pay preferred holders $26.65 for each share of the series As validly tendered. The redemption price includes accrued and unpaid dividends.

The company is looking to redeem up to 13 million of the preferreds.

The cash offer expires May 20 at 11:59 PM ET.

In order to complete the tender, Ally must raise the necessary funds via the issuance of new debt or equity.

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