Preferred market begins week weak; Wells Fargo sells upsized deal at low end of price talk

By Stephanie N. Rotondo

Phoenix, Nov. 13 - The preferred stock market was on the softer side Tuesday as market players returned from the long weekend.

However, the market was only "slightly" heavy, a trader said.

"We might see some profit-taking, especially given the run up that preferreds have had," the trader commented.

Last week, a trader reported that he had heard rumors of a new Wells Fargo & Co. preferred deal. On Tuesday, that chatter proved to be true when the San Francisco-based bank said it intended to sell at least $250 million of series O noncumulative perpetual class A preferred shares.

Price talk was 5.125% to 5.25%, according to a trader.

The deal came after the close, upsized at $600 million and at the tight end of talk.

Wells Fargo upsized, prices

Wells Fargo brought a $600 million issue of 5.125% series O noncumulative perpetual class A preferreds on Tuesday.

"It seems to be going fine," a trader said of the new issue's dealings in the gray market. He saw trades around $24.60 as of midday, ahead of pricing.

Wells Fargo Securities LLC is the bookrunner. Joint lead managers are Bank of America Merrill Lynch, Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and UBS Securities LLC.

Proceeds will be used for general corporate purposes.

Sun Communities does well

In recent deals, a trader said Sun Communities Inc.'s $75 million offering of 7.125% series A cumulative redeemable preferreds were trading "at par or better."

"That one's doing pretty well," he said of the deal that priced Nov. 5.

Meanwhile, City National Corp.'s $175 million of 5.5% noncumulative perpetual preferreds - which also priced Nov. 5 - were pegged at $24.65 offered.

And, Solar Capital Ltd.'s $100 million of 6.75% $25-par senior notes due 2042 were trading at $24.80.

That deal came Nov. 8.

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