KeyCorp brings upsized $450 million deal tighter than initial talk; preferreds mixed

By Cristal Cody

Tupelo, Miss., April 22 – KeyCorp priced an upsized $450 million of perpetual non-cumulative redeemable preferred shares on Monday on top of guidance but tighter than initial talk.

Preferred stocks opened the day soft following the long Good Friday holiday weekend and were mixed over the session.

The Wells Fargo Hybrid and Preferred Securities index closed down 0.16% at 2,250.52. The index declined 0.04% early Monday after closing Thursday off 0.12%.

The U.S. iShares Preferred Stock ETF was down 1 cent over the morning but ended up 0.01% to $36.56. The ETF closed Thursday down 2 cents, or 0.05%, at $36.60.

KeyCorp’s stock was listed over the afternoon for over-the-counter trading under the symbol “KEYLL.”

In secondary trading, KeyCorp’s existing preferred stock declined about 14 cents to 16 cents over the session.

KeyCorp’s 5.65% series F fixed-rate perpetual non-cumulative preferred stock (NYSE: KEYPrJ) fell 14 cents, or 0.56%, to $25.05 on trading volume of about 451,000 shares.

In other new issue trading, Energy Transfer Operating, LP’s $700 million of 7.6% $25-par series E fixed-to-floating rate cumulative redeemable perpetual preferred units that priced on Wednesday closed the day flat at $24.90. The notes had seen a bump of 1 cent, or 0.04%, to $24.91 in early over-the-counter trading.

The preferred units (Ba2/BB/BB) dropped 15 cents, or 0.6%, to end Thursday at $24.90.

The Dallas-based natural gas midstream and intrastate transportation and storage company plans to apply to list the units on the New York Stock Exchange under the symbol “ETPPrE.”

Energy Transfer sold 28 million shares of the preferred units, which will reset May 15, 2024 to a floating rate of Libor plus 516.1 basis points.

KeyCorp sells $450 million

KeyCorp priced an upsized $450 million of 5.625% $25-par series G non-cumulative redeemable preferred shares (Baa3/BB+/BB) in Monday’s offering, according to a market source and an FWP filed with the Securities and Exchange Commission.

The company sold 18 million depositary shares in the offering. Each depositary share represents 1/40th of a share of the series G preferred stock.

The preferreds priced on top of guidance and came tighter than initial talk in the 5.75% to 5.875% area. The deal was upsized from $200 million.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets, UBS Securities LLC and Wells Fargo Securities LLC were the bookrunners.

KeyCorp plans to apply to list the preferreds on the NYSE under the symbol “KEYPrK.”

Cleveland-based KeyCorp is a financial services company and parent company of KeyBank.

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