Preferreds gain; primary space goes quiet; Qwest notes hit NYSE; Morgan Stanley improves

By Stephanie N. Rotondo

Seattle, Aug. 23 – The preferred stock market was “mildly stronger, but just barely,” a trader reported Tuesday.

The Wells Fargo Hybrid and Preferred Securities index closed 16 basis points higher, after being up 9 bps at mid-morning.

The new issue calendar, however, continued to be silent.

“We are hearing there is nothing for the rest of the month,” a trader said, adding that September was expected to build back up.

The trader said he was not sure why the primary market had gone dark, especially given that the appetite for new issues remained high.

“It might just be seasonal slowdown,” the trader commented. “It just seems like the more you hold out, the stronger the secondary gets and the cheaper you can issue [new deals].”

Among recent deals, Qwest Corp.’s $977.5 million of 6.5% $25-par notes due 2026 were admitted to the New York Stock Exchange on Tuesday under the ticker “CTBB.”

Paper was trading at $25.60 at mid-morning, up from opening levels of $25.56. However, the paper came in to trade at $25.53 by the bell.

The issue dominated the day, with over 1.58 million preferred shares trading.

The deal came Aug. 11 via BofA Merrill Lynch, Morgan Stanley & Co. LLC, RBC Capital Markets LLC and Wells Fargo Securities LLC. The company initially sold $850 million of the notes, reporting Monday that its $127.5 million greenshoe had been fully exercised. That brought the total outstanding amount to $977.5 million.

The company plans to use proceeds to redeem all or a portion of the $661.25 million of outstanding 7.5% $25-par notes due 2051 (NYSE: CTW). The issue becomes callable Sept. 15.

Morgan Stanley active

Morgan Stanley & Co. Inc.’s preferreds made several appearances on the day’s most-active list, with all the securities driving higher.

The 7.125% series E fixed-to-floating rate noncumulative preferreds (NYSE: MSPE) rose 12 cents to $30.19, as the 6.875% series F fixed-to-floating rate noncumulative preferreds (NYSE: MSPF) gained 3 cents to close at $29.405.

The floating-rate series A noncumulative preferreds (NYSE: MSPA) improved 11 cents to $21.91, while the 6.375% series I fixed-to-floating rate noncumulative preferreds (NYSE: MSPI) increased 20 cents to $28.42.

During August, the New York-based investment bank redeemed $2.825 billion of capital securities, taking out four series of debt.

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