Morgan Stanley sells $1 billion of new preferreds; Brookline plans to sell subordinated notes

By Stephanie N. Rotondo

Phoenix, Sept. 11 – The preferred stock new issue calendar continued to build out on Thursday as Morgan Stanley & Co. Inc. announced – and priced – a benchmark-sized offering of series I fixed-to-floating rate noncumulative perpetual preferreds.

The New York-based investment bank sold $1 billion of the preferreds at par to yield 6.375%.

Price talk was 6.375% to 6.5%, according to one market source.

The issue begins to float on Oct. 15, 2024 at Libor plus 370.8 basis points.

A trader pegged the issue at $24.92 bid in the early gray market. Just prior to pricing, another source quoted the preferreds at $25.07 bid, $25.12 offered.

“Obviously it has done well,” the source said.

Morgan Stanley & Co. LLC ran the books.

Meanwhile, Brookline Bancorp Inc. said it planned to sell at least $50 million of fixed-to-floating-rate subordinated notes due 2029.

That deal is coming via Sterne Agee & Leach Inc. and Sandler O’Neill + Partners LP.

A trader said he had yet to see any markets for the paper, however.

“Nobody is quoting them,” he said.

There were likewise few quotes for Scorpio Bulkers Inc.’s proposed offering of $25-par senior notes due 2019.

The Monaco-based shipping company originally registered the notes on Aug. 7 and released price talk and size details on Wednesday. Come Thursday, the company said it had increased the size of the deal to $60 million from $35 million.

Price talk was steady at 7.5% to 7.625%.

“It should price today,” one trader opined. He likened the deal to a nearly “best-efforts” sale, in which the company would continue selling until demand was met.

“Nobody is bothering to make any markets,” he said. “It’s like, if you want it, they’ll give you all they want.”

Stifel Nicolaus & Co. Inc., Deutsche Bank Securities Inc. and Jefferies LLC are the bookrunners.

Overall, the market looked to be attempting to rally after being down all week.

The Wells Fargo Hybrid and Preferred Securities index was volatile during the session, but mostly toward the positive side.

The index ended the day up 4 bps.

Recent deals on the radar

Recent deals continued to be in focus on Thursday.

From Wednesday business, Vanguard Natural Resources LLC’s $100 million of 7.75% series C cumulative redeemable preferred units were pegged at $24.60 early in the session.

And, CHS Inc.’s $475 million issue of 6.75% series 3 class B reset rate cumulative redeemable preferreds were quoted at $24.90 bid, $24.95 offered at mid-morning. At the end of the day, the issue was seen up 17 cents at $25.12.

The new issue priced Monday.

Of recently listed securities, Bank of America Corp.’s $1 billion of 6.625% series W noncumulative preferreds (NYSE: BACPW) dominated trading, with over 1.36 million shares changing hands.

The issue finished the session down 7 cents at $24.84.

Looking to the coming week, a trader speculated that the pipeline would continue to flow.

“I think we’ll have about the same kind of calendar next week,” he said. Among possible candidates for new deals were Citigroup Inc. or JPMorgan Chase & Co., though the trader remarked that he expected Citigroup to bring a deal before JPMorgan did.

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