Preferreds give up gains; Charles Schwab shares get temporary symbol; IberiaBank prices

By Stephanie N. Rotondo

Phoenix, July 29 – The preferred stock market was “kind of sliding all day, though it started up,” a market source reported Wednesday.

Additionally, the source remarked that it was “not a great liquidity day.”

The lack of volume was attributed in part to the Federal Reserve’s two-day policy meeting, which concluded in the afternoon. The preferred market’s softness came despite the central bank’s continued optimism about the current state of the economy.

Popular opinion is that the Fed will opt to raise interest rates in September. But with the recent weakness in the markets and new economic data being disappointing, some have begun to speculate that the increase might not occur until December.

The Wells Fargo Hybrid and Preferred Securities index closed off 4 basis points. The index was up 4 bps at mid-morning.

The Charles Schwab Corp.’s $600 million of 6% series C noncumulative perpetual preferreds – a deal priced Monday – was assigned a temporary trading symbol early in the day, a trader reported.

The symbol is “CSABP.”

The preferreds remained over par, though they were coming in a bit from Tuesday’s closing levels.

A trader pegged the issue at $25.03 bid, $25.08 offered. A second source saw the preferreds ending at $25.08, with a volume weighted average price of $25.05.

The preferreds had ended Tuesday’s session around $25.10.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC ran the books.

Meanwhile, JPMorgan Chase & Co.’s $1.1 billion of 6.15% series BB noncumulative preferreds ended at $24.90, down 3 cents.

That deal came July 22 via J.P. Morgan Securities LLC.

IberiaBank prices

Also in the primary arena, IberiaBank Corp. sold $75 million of series B fixed-to-floating rate noncumulative preferreds at 6.625%.

A trader saw a gray market quote of $24.60 bid, $24.80 offered at midday.

The deal was first announced Tuesday. On Wednesday, the deal was initially slated at $50 million, with 6.625% to 6.75% price talk.

BofA Merrill Lynch and UBS Securities led the deal.

Dividends will be fixed and payable semiannually through Aug. 1, 2025. After that date, the dividend will float at Libor plus 426.2 bps and will be paid quarterly.

The preferreds become redeemable at par plus accrued dividends on Aug. 1, 2025. The company can also redeem the issue in whole within 90 days of a regulatory capital treatment event.

The Lafayette, La.-based financial holding company will use the proceeds for general corporate purposes, including to fund possible acquisitions, for working capital needs and for investments in subsidiaries to support growth.

TriplePoint selling notes

Late in the session, another deal was added to the calendar – a $40 million offering of $25-par notes due 2020 from TriplePoint Venture Growth BDC Corp.

Keefe Bruyette & Woods Inc. and Deutsche Bank Securities Inc. are the joint bookrunning managers. Co-lead managers are BB&T Capital Markets, Janney Montgomery Scott LLC and Oppenheimer & Co.

Interest will be payable on the 15th day of January, April, July and October, beginning Oct. 15.

The notes become redeemable in 2017 at par plus accrued interest.

Proceeds will be used to temporarily repay a portion of outstanding borrowings under a credit facility. The funds may also be used for investments and for general working capital purposes.

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