Morgan Stanley sells $25-par, $1,000-par preferreds; Goldman up; JPMorgan, Allstate busy

By Stephanie N. Rotondo

Phoenix, April 22 - The primary preferred stock market churned out another set of deals on Tuesday.

On the heels of the Goldman Sachs Group Inc.'s dual offering on Monday, Morgan Stanley followed suit with a double deal of its own. The New York-based investment bank said it was selling $25-par series G noncumulative perpetual preferred stock, as well as $1,000-par series H fixed-to-floating rate noncumulative perpetual preferreds.

A trader said price talk on the $25-par deal was "adjusted down" to 6.625% from 6.875%. Talk on the $1,000-par deal was around 5.5%, he said.

Though he had not seen any gray markets for the $1,000-pars, the $25-pars were pegged at $24.94 bid early in the session.

Just like the Goldman deals, both Morgan Stanley issues priced and freed to trade late in the afternoon. The company sold $500 million of the $25-par preferreds at 6.625% and another $1.3 billion of $1,000-par preferreds at 5.45%.

The $1,000-pars begin floating on July 15, 2019 at Libor plus 361 basis points.

Post-pricing, the $25-pars were offered at $25.05 and the $1,000-pars at 101.375, according to a market source.

Morgan Stanley & Co. LLC ran the books on both offerings.

As for the Goldman deals - both of which priced and freed on Monday - the $700 million of 6.375% $25-par series K fixed-to-floating rate noncumulative perpetual preferred stock was trading around par, while the $1.3 billion issue of 5.7% $1,000-par series L fixed-to-floating rate noncumulative perpetual preferred stock was at 102 early in the session.

Later in the afternoon, a source saw the $25-pars offered at $25.12 and the $1,000-pars at 102.375.

A trader said Morgan Stanley and Goldman were dominating early trading.

"There's not enough to go around," he said. "[These deals] are being launched and gobbled up real quick."

He speculated that at least one more deal could come this week.

Overall, the preferred market continued to tick higher.

The Wells Fargo Hybrid and Preferred Securities index was up 11 bps as of mid-morning, rising up to 17 bps by the bell.

"Volume was on the lighter aside, except for two issues," a source said.

Those issues were JPMorgan Chase & Co.'s 6.7% series T noncumulative preferred stock (NYSE: JPMPB) and the Allstate Corp.'s 6.625% series E fixed-rate noncumulative preferreds (NYSE: ALLPE).

The JPMorgan issue ended the day at $25.60. Allstate's preferreds closed at $25.47, up 13 cents.

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