Preferreds up amid holiday week; Stanley Black & Decker sells $400 million 5.75% notes

By Stephanie N. Rotondo

Phoenix, Nov. 25 - Preferred stocks were kicking off the short holiday week with a firm tone on Monday.

The Wells Fargo Hybrid and Preferred Securities index was trading up 19 basis points by mid-morning. By the end of business, the index was up 29 bps.

A trader commented that recent data showed housing was "slowing down" and that investors were wondering "how that effects jobs." Still, he said that chatter is that "we'll probably see rates stay at these [lower] levels to keep people interested in buying homes." That in turn would be good for issuers.

Stanley Black & Decker Inc. announced plans to sell $400 million of fixed-to-floating rate junior subordinated notes due 2053 early in the session.

Price talk on the $1,000-par paper was 6% to 6.125%, according to a trader.

The deal came at 5.75%, with $400 million of notes being sold. The issue begins to float on Dec. 15, 2018 at Libor plus 430 bps.

Though a trader said he had not seen any gray markets for the notes, the 5.75% $25-par junior subordinated notes due 2052 (NYSE: SWJ) were trading off 11 cents to $22.47.

"When it frees to trade, we'll see where the real market is," a source said of the new deal.

The new issue will not be listed.

The company is doing the offering concurrently with a sale of $300 million equity units.

Deutsche Bank Securities Inc., Goldman Sachs & Co. and Wells Fargo Securities LLC are the joint bookrunning managers.

Market gains, volume muted

Liquidity was "really light," a market source said. "We've had worse, but it was light."

Of the day's most actively traded paying securities, Morgan Stanley & Co. Inc.'s 7.125% series E fixed-to-floating rate noncumulative preferreds (NYSE: MSPE) fell a dime to $26.15. Citigroup Inc.'s 6.875% series K fixed-to-floating rate noncumulative preferred stock (NYSE: CPK) also remained active and followed Morgan Stanley's trend, slipping a penny to $25.09.

Goldman Sachs & Co.'s 5.5% series J fixed-to-floating rate noncumulative preferreds (NYSE: GSPJ) meantime rose 13 cents to $22.73.

Qwest Corp.'s 6.125% $25-par notes due 2053 (NYSE: CTY) ended the day off a nickel at $20.41.

And, JPMorgan Chase & Co.'s 5.5% series O noncumulative preferreds (NYSE: JPMPD) put on 11 cents, closing at $20.99.

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