Morgan Stanley prices upsized preferreds; Miller added to deal flow; Allstate frees up

By Stephanie N. Rotondo

Phoenix, Sept. 24 - The preferred stock market was firming back up on Tuesday as the Wells Fargo Hybrid and Preferred Securities index moved up by 12 basis points by midday.

However, the market had given up some of those gains by the end of business and the index closed up only 4 bps, or a penny on average for $25-par paper.

The primary continued to pick up as well. Morgan Stanley & Co. Inc. announced plans to sell at least $250 million of series E fixed-to-floating rate noncumulative perpetual preferreds. Initial price talk was around 7.375%, but a trader said he was hearing that could be lowered.

A market source later confirmed that talk had been lowered to around 7.125% and the total amount to be issued upped to $750 million.

Miller Energy Resources Inc. also said it was bringing a deal, an offering of 10.5% series D fixed-to-floating rate cumulative redeemable perpetual preferred stock. However, a trader said he hadn't seen any markets for that issue.

"It's going to be like a best-efforts deal," he said.

From Monday business, the Allstate Corp.'s newly priced $350 million issue of 6.75% series C fixed-rate noncumulative perpetual preferreds had freed up by midday, according to a trader.

He pegged that paper at $24.78 bid, $24.80 offered.

Among other recent deals, CHS Inc.'s $250 million issue of series 1 class B cumulative redeemable preferreds - a deal that came Thursday and freed to trade on Friday - was seen bid at $26.00.

"Once that freed, it really moved up pretty quick," a trader said.

At the close, a source said the issue was among the day's most actively traded, with about 715,000 shares changing hands. He said the preferreds ended the session off a dime around $26.00, with a volume weighted average price of $25.88.

Morgan Stanley brings deal

Morgan Stanley brought a $750 million offering of 7.125% series E fixed-to-floating rate noncumulative perpetual preferreds on Tuesday.

The deal was upsized from $250 million and pricing was revised down from 7.375%.

Ahead of pricing, a trader saw a less 5-cent trade in the gray market around midday. After the bell, a market source said he saw a par bid for the shares.

The dividend will be fixed until Oct. 15, 2023, at which time it will begin to float at Libor plus a spread.

The New York-based investment bank will apply to list the new securities on the New York Stock Exchange under the ticker symbol "MSPE."

Proceeds will be used for general corporate purposes.

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