Wells Fargo sells $600 million of 5.625% preferreds; TICC lists on Nasdaq; GSEs end mixed

By Stephanie N. Rotondo

Seattle, April 17 – The post-Easter trading week got started by throwing a new preferred stock deal into the mix, a market source reported on Monday.

As was expected, one of the banks that reported earnings on Thursday was the first to tap the market, as Wells Fargo & Co. brought $600 million of 5.625% $25-par series Y class A noncumulative perpetual preferred stock.

Ahead of pricing, a market source saw the issue quoted at $25.07 bid, $25.17 offered in the gray market.

A trader had seen the paper quoted at $24.88 bid, $24.92 offered in the early gray market.

Price talk was 5.875%. The deal was upsized from $250 million.

“The gray market price tells you the pricing was reasonable,” one source said. “Not great, but reasonable.

“The initial price talk of 5.875% was too cheap,” the source added.

Wells Fargo Securities LLC is the bookrunner.

The San Francisco-based bank plans to use proceeds for general corporate purposes, including investments in or advances to subsidiaries, debt repayments and reducing outstanding commercial paper and other debts.

On the heels of the new issue announcement, Wells Fargo’s existing paper was initially waning but managed to close higher.

The 5.5% series X class A noncumulative preferreds (NYSE: WFCPrX) rose a nickel to par, though the preferreds were off 7 cents at mid-morning, trading at $24.88. The 5.7% series W class A noncumulative preferreds (NYSE: WFCPrW) added 6 cents, closing at $25.57.

The preferreds were down 20 cents at $25.31 in early dealings.

On Thursday, Wells Fargo reported earnings per share of $1.00 – versus the 97 cents analysts had predicted – but revenue barely missed expectations at $22 billion.

Meanwhile, TICC Capital Corp.’s $64.37 million of 6.5% $25-par notes due 2024 listed on the Nasdaq Global Select Market under the ticker symbol “TICCL.”

The notes ended at $25.20, which compared to opening levels at par.

The company initially sold $57.5 million of the notes on April 4, with the deal coming upsized from $50 million. On April 12, TICC said that $6.87 million of its $8,625,000 greenshoe had been exercised, bringing the total amount outstanding to $64.37 million.

Ladenburg Thalmann & Co. Inc., BB&T Capital Markets, Compass Point and William Blair & Co. were the joint bookrunners. Maxim Group LLC and National Securities Corp. were the lead managers.

TICC is a Greenwich, Conn.-based business development company.

Fannie, Freddie mixed

As for more established secondary issues, GSEs were on the active side, but mixed.

Fannie Mae’s 8.25% series T noncumulative preferreds (OTCBB: FNMAT) dipped 2 cents to $5.98, while the 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) added 3 cents to finish at $6.16.

Freddie Mac’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) declined 8 cents, or 1.46%, to $5.65.

In its April 2017 Economic and Housing Outlook report, Fannie maintained its forecast of 2% growth and also said that any meaningful economic change in the near term was unlikely.

“We continue to await details on the new administration’s plans,” said Doug Duncan, Fannie’s chief economist, in the report. “We’re intrigued by the disparity between elevated consumer and business optimism and signs of decelerating first quarter economic growth. However, we expect growth to rebound this quarter as special factors that weighed on growth partially unwind.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.