Morning Commentary: Treasury weakness hits Capital One; Customers’ deal frees; Eagle Point ahead

By Stephanie N. Rotondo

Phoenix, May 12 – The preferred stock market was softening in early Tuesday trading, putting pressure on new deals.

A trader said Capital One Financial Corp.’s $1 billion of 5.55% series E fixed-to-floating rate noncumulative preferreds – a deal priced Monday – were bid for at 98.5 early in the session, though he attributed the weakness in the issue to a lower Treasury market. He speculated that as that market inched up, the new deal could trade in a 99 to par context.

The new $1,000-par paper came via Barclays, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Wells Fargo Securities LLC and Capital One Securities Inc.

Meanwhile, Customers Bancorp Inc.’s $50 million of 7% series C fixed-to-floating rate noncumulative preferreds – a $25-par deal that also came Monday – freed to trade at 10:30 a.m. ET, according to a trader.

Though he had yet to see any markets, the trader opined that the preferreds would soon pop up to par.

Morgan Stanley and UBS Securities LLC ran the books.

As for new business, Eagle Point Credit Co. Inc. announced a $35 million offering of series A term preferred stock due 2022.

A trader said he had not seen any details on the deal, which was coming though Deutsche Bank Securities Inc. and Keefe Bruyette & Woods Inc.

Overall, the secondary market was off 8 basis points, according to the Wells Fargo Hybrid and Preferred Securities index at mid-morning.

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