Preferreds firm on light volume; Associated Banc prices; MetLife slips as tender launched

By Stephanie N. Rotondo

Phoenix, June 1 – The first trading day of June was a little muted, preferred stock sources reported Monday.

“Volume was really light,” one source said.

And while the broader markets were on the mixed side, the preferred space was aiming for higher ground.

The Wells Fargo Hybrid and Preferred Securities index finished 3 basis points better. The index was up 10 bps at mid-morning.

The subdued feel of the market came ahead of a busy week of economic data, including a jobs report for May, which is due Friday.

Despite the somewhat lackluster day, one new issue got done, a $65 million offering of 6.125% series C noncumulative perpetual preferreds from Associated Banc-Corp.

Ahead of pricing, a trader had noted that price talk was in the 6.125% area and that the size of the deal – 2.6 million shares, or $65 million – was not expected to grow.

UBS Securities LLC and Citigroup Global Markets Inc. ran the books.

In the wake of the new issue, the Green Bay, Wis.-based bank’s 8% series B perpetual preferreds (NYSE: ASBPB) fell 23 cents to $26.72.

Among other recently priced preferred deals, JPMorgan Chase & Co.’s $1.3 billion of 6.1% series AA noncumulative perpetual preferreds – a $25-par issue priced late Thursday – were slated to free up sometime Monday, a trader said.

He pegged the shares at $24.80, about unchanged from Friday levels.

Post-close, however, the shares were seen at $24.77.

Elsewhere in the JPMorgan structure, the 6.125% series Y noncumulative preferreds (NYSE: JPMPF) fell 3 cents to $25.09, while the 5.5% series O noncumulative preferreds (NYSE: JPMPD) declined a dime to $24.07.

MetLife launches tender

A market source said MetLife Inc. issued an “unusual” tender notice for its 6.5% series B noncumulative preferreds (NYSE: METPB) after the day’s bell.

The New York-based insurance company said in a press release that it was tendering for the preferreds for June 26 at a price of par plus accrued dividends. However, the company said it was also calling the issue for July 1 – at $25.00 per share, without any accrued dividends.

“There’s got to be some legal reason for doing that,” the source speculated.

The redemption of the series B preferreds was not news, in and of itself. MetLife said Wednesday that it planned to call the paper when it priced $1.5 billion of 5.25% $1,000-par series C fixed-to-floating rate noncumulative preferreds.

As for the Bs, they ended the day down a penny at $25.09.

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