Details emerge on Wells Fargo Real Estate preferreds; U.S. Cellular notes inch higher

By Stephanie N. Rotondo

Phoenix, Dec. 3 – In a day that saw limited volume among paying securities, preferred stocks closed Wednesday’s session weaker, despite earlier gains.

The flip-flop of the market follows a trend that has been going on all week.

The market fell Monday and slipped again on Tuesday, despite ticking higher early in the day. As of mid-morning on Wednesday, the Wells Fargo Hybrid and Preferred Securities index was up 5 basis points but closed off 18 bps.

A trader said he was hearing rumblings regarding Wells Fargo Real Estate Investment Corp.’s previously proposed offering of series A cumulative perpetual preferreds.

The company initially said on Sept. 25 that it would sell $100 million of the preferreds, but in a new regulatory filing, the company registered $275 million of the securities.

The deal was said to be launched at $250 million, however.

Price talk is in a 6.375% area, according to a market source, who also saw a $24.75 gray market bid for the paper.

Pricing was expected Thursday or Friday, with settlement planned for Dec. 11, the source said.

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

In other recent deals, United States Cellular Corp.’s $275 million of 7.25% senior unsecured notes due 2063 were seen trading around $24.62, a trader said. The Street market was $24.60 bid, $24.65 offered, he said.

The deal priced Monday and freed to trade on Tuesday.

BofA Merrill Lynch, Morgan Stanley, RBC Capital Markets, UBS Securities and Wells Fargo Securities ran the books.

In other recent deals, Public Storage’s $175 million of 5.875% series A cumulative perpetual preferreds began trading on the New York Stock Exchange on Wednesday.

The deal priced Nov. 20. The ticker symbol is “PSAPA.”

The preferreds closed at $24.76. The paper was trading at $24.85 early in the session, down from opening levels of $24.91.

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