Morning Commentary: Charles Schwab selling noncumulative preferreds; recent deals expected to slip

By Stephanie N. Rotondo

Seattle, Feb. 29 – The Charles Schwab Corp. was trying to get one more deal in during February as Leap Day trading got underway.

The San Francisco-based financial institution said Monday that it was selling at least $250 million of series D noncumulative perpetual preferred stock.

Price talk was in a 6% to 6.125% range, according to a market source.

There was a $24.65 bid in the early gray market.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

On the heels of the new deal, Schwab’s 6% series C noncumulative preferreds (NYSE: SCHWPC) were falling 89 cents, or 3.35%, to $25.69.

As for recently priced issues, eBay Inc.’s $750 million offering of 6% $25-par notes due Feb. 1, 2056 were seen at $24.75 bid, $24.82 offered. W.R. Berkley Corp.’s $100 million of 5.9% $25-par subordinated debentures due 2056 were meantime pegged at $24.85 bid.

“I’m assuming with the new deal [recent issues] will pull back,” a trader said.

eBay’s notes came Feb. 22. W.R. Berkley priced Tuesday.

The preferred space as a whole was weaker as the day started.

The Wells Fargo Hybrid and Preferred Securities index was down 13 basis points at mid-morning.

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