Northern Trust taps market; Capital One trades over par; International Ship lower

By Stephanie N. Rotondo

Seattle, Aug. 1 – The preferred stock market started the week off with a firm tone, as the Wells Fargo Hybrid and Preferred Securities index traded up 18 basis points by mid-morning. However, as the broader markets sunk, so did the preferred space, leaving the index to close up just 4 bps.

The positive feel of the market was keeping the new issue pipeline flowing.

Northern Trust Corp. launched a $500 million offering of $1,000-par fixed-to-floating rate series D noncumulative perpetual preferreds at par to yield 4.6%.

A market source said initial price talk was 4.75%, though it was later revised to 4.6%.

“It will all be put away institutionally,” a trader said.

But another market source said that as pricing on the deal was “pushed,” it might have failed to attract its desired investors.

“A lot of institutions weren’t so active in it,” he said.

He saw the preferreds “wrapped around par” just prior to pricing.

Late in the session, Northern Trust priced $500 million of the preferreds at par to yield 4.6%, a market source said.

Barclays, BofA Merrill Lynch, Goldman Sachs & Co. and Morgan Stanley & Co. LLC are running the books.

As for deals from the previous week, Capital One Financial Corp.’s $600 million of 5.2% series G noncumulative preferreds – a deal priced July 26 – were pegged at par bid, $25.06 offered in early trading. The paper eventually pushed up to $25.09, a gain of 5 cents on the day.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley, UBS Securities LLC and Wells Fargo Securities LLC were the bookrunners. The issue is trading under a temporary symbol, “CITLP.”

OM Asset Management plc’s $125 million of 5.125% $25-par senior notes due 2031 were meantime pegged in a $24.91 to $24.92 context.

That issue came July 27 via BofA Merrill Lynch, Wells Fargo and Citigroup Global Markets Inc.

International Ship bankruptcy

International Shipholding Corp. filed for bankruptcy on Monday as it failed to sell off assets quickly enough to satisfy creditors.

The company’s 9% series B cumulative redeemable preferreds (OTCBB: ISHCO) dropped $5.50, or 32.35%, to $11.50 in response to the news. The 9.5% series A cumulative redeemable preferreds (OTCBB: ISHCP) were also much weaker, falling $5.50, or 31.43%, to $12.00.

The Mobile, Ala.-based shipping company has been in the process of selling certain assets in order to cut down debt. At the end of the first quarter, it had chopped funded debt down to $117 million from $243 million at the end of 2014.

And while the company said its core businesses have been performing “satisfactorily,” it still needed to shave off some units in order to save up enough money to be in compliance with lender covenants.

Additionally, of the asset sales that have occurred, the company has been unable to get prices high enough to meet its needs.

The company has lined up $16 million of bankruptcy funding.

BofA call coming up

Bank of America Corp.’s 6% capital securities (NYSE: BACPZ) were busy but weaker on Monday as investors prepare for the issue to be redeemed.

The paper finished the day at $25.30, off a penny.

The issue, as well as the 6.75% trust preferred securities linked to Countrywide Financial Corp. and the 6.45% TruPs linked to Merrill Lynch, will be redeemed on Aug. 15.

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