Morning Commentary: Preferreds weaken in early trades; Wells Fargo Real Estate deal ticks higher

By Stephanie N. Rotondo

Phoenix, Dec. 4 – Preferred stocks were getting beat up in early Thursday trading.

The Wells Fargo Hybrid and Preferred Securities index was down 28 basis points at mid-morning.

In the past few sessions, the market looked to be ticking higher in the morning. But by midday, the space would start to trade off and would eventually finish soft.

Come Thursday, however, there was no wishy-washy moves, just a steady decline.

Overall, a trader said trading was “pretty quiet.” He noted that in the secondary, oil and gas exploration and production names were more volatile than some other sectors.

But investors did seem to be intrigued with a new deal being shopped by Wells Fargo Real Estate Investment Corp.

“It has been moving up,” a trader said, seeing the proposed offering of series A cumulative perpetual preferreds trading in a $24.90 to $24.93 context in the gray market.

“It’s going to be a good credit,” the trader said. “Bank [real estate investment trusts] tend to do pretty well.

“And it’s not a terrible coupon they put on it,” he added.

The Minneapolis-based company initially registered $100 million of the preferreds on Sept. 25. In a regulatory filing on Wednesday, the company increased that amount to $275 million.

The deal was said to be launched at $250 million, with price talk in a 6.375% area.

Pricing is expected Thursday or Friday.

Wells Fargo Securities LLC is running the books.

Among deals that have priced but are not yet listed, United States Cellular Corp.’s $275 million of 7.25% senior unsecured notes due 2063 were “holding in right around” $24.85, according to a trader.

The $25-par “baby bonds” priced Monday and freed to trade on Tuesday.

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

© 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.