Preferreds recoup early losses; Capital One pressured; Customers’ deal frees to trade

By Stephanie N. Rotondo

Phoenix, May 12 – The preferred stock market was softening in early Tuesday trading but managed to end the day with a positive tone.

The Wells Fargo Hybrid and Preferred Securities index closed 19 basis points higher on the day. The index was down 8 bps at mid-morning.

The early weakness did put some 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.

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 shares 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 through Deutsche Bank Securities Inc. and Keefe Bruyette & Woods Inc.

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