Midday Commentary: Preferreds soft; Wells Fargo's new noncumulative deal frees from syndicate

By Stephanie N. Rotondo

Phoenix, Dec. 12 - Preferred stocks continued to sell off on Thursday as investors swapped out their shares for new issues, a trader said.

The Wells Fargo Hybrid and Preferred Securities index was down 27 basis points around midday.

Wells Fargo & Co.'s $750 million offering of 6.625% series R class A fixed-to-floating rate noncumulative perpetual preferred stock freed to trade early in the session, according to a trader. The deal priced Wednesday.

The trader saw the issue trading in a par to $25.05 context.

The dividend on the new deal will be fixed through March 15, 2024, at which time it will float at Libor plus 369 bps.

Among other recently priced deals, Morgan Stanley & Co. Inc.'s $850 million of 6.875% series F fixed-to-floating rate noncumulative preferreds were hanging around $24.95, while Fifth Third Bancorp's $450 million of 6.625% series I fixed-to-floating rate noncumulative preferreds were offered at $24.80.

Both of those issues came last week. Listing on the New York Stock Exchange is expected Friday or early next week.

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