Midday Commentary: Morgan Stanley eyes preferred sale; Fifth Third frees to trade; market slipping

By Stephanie N. Rotondo

Phoenix, Dec. 5 - The preferred stock market was focusing on the primary market on Thursday.

Morgan Stanley & Co. Inc. announced a deal early in the day, a $250 million sale of $25-par series F fixed-to-floating rate noncumulative preferred stock.

Price talk is 6.875% to 7%, according to a market source.

"It seems like they cut everybody out," a trader said of the underwriting, noting that it appeared to be going to mainly institutional clients and "within [the underwriter's] own retail."

The trader saw the issue at $24.90 in the early gray market.

Morgan Stanley is running the books.

Meanwhile, Fifth Third Bancorp's $450 million of 6.625% $25-par series I fixed-to-floating rate noncumulative perpetual preferred stock - a deal that came Wednesday - "has been pretty active," the trader said.

The issue freed up before the market opened, he noted.

Paper was trading at par "or a little better," the trader said.

Overall, the market was "softer with the Treasuries, but not materially so," he said, opining that $25-par issues were down 15 cents to 20 cents.

The Wells Fargo Hybrid and Preferred Securities index was off 16 basis points at mid-morning.

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