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Charles Schwab preferreds come upsized, tighter than talk; recent deals expected to dip
By Stephanie N. Rotondo
Seattle, Feb. 29 – The Charles Schwab Corp. got one more preferred stock 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. The issue came upsized at $750 million, pricing at par to yield 5.95%.
Initial price talk was in a 6% to 6.125% range, according to a market source.
Toward the end of the session, a trader quoted the issue at $24.93 bid, $24.97 offered. 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) fell 91 cents, or 3.42%, to $25.67.
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.
Overall, preferred stocks were trending lower, though there was some indications it wanted to move higher.
The Wells Fargo Hybrid and Preferred Securities index ended off 10 basis points, after being down 13 bps at mid-morning. But the index did trade up at a couple points throughout the day, ultimately erasing its modest gains to trade back in the red.
While the Wells Fargo index was down, the S&P iShares Preferred Stock ETF (NYSE: PFF) ended 29 bps higher for the day. That could be indicative of cash flow into the largest preferred ETF at month-end.
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