Charles Schwab to sell noncumulative preferreds; price talk 6%-6.125%

By Stephanie N. Rotondo

Phoenix, July 27 – The Charles Schwab Corp. is selling at least $250 million of series C noncumulative perpetual preferred stock (expected ratings: Baa2/BBB/BB+), the company said in a prospectus filed with the Securities and Exchange Commission on Monday.

The preferreds will be issued as depositary shares representing a 1/40th interest.

Price talk is 6% to 6.125%, according to a market source.

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

When declared, dividends will be paid on the first day of March, June, September and December, beginning Dec. 1.

The preferreds become redeemable in 2020 at par plus accrued dividends. The company can also redeem the preferreds in whole within 90 days of a regulatory capital treatment event.

The San Francisco-based financial services company will apply to list the new securities on the New York Stock Exchange under the ticker symbol “SCHWPC.”

Proceeds will be used to support balance sheet growth, including the migration of certain client balances from sweep money market funds into Schwab Bank, which may be subject to notice and/or approvals from clients and regulators.

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