Preferred stocks start soft; Charles Schwab prices $600 million; DynaGas lists on NYSE

By Stephanie N. Rotondo

Phoenix, July 27 – Preferred stocks were following the broader markets lower on Monday amid another sell-off in Chinese stocks and continued softness in commodities.

The Wells Fargo Hybrid and Preferred Securities index dropped 13 basis points by the bell.

Despite the day’s decline, the Charles Schwab Corp. managed to bring a decently upsized deal to market.

The San Francisco-based financial services firm sold $600 million of 6% series C noncumulative perpetual preferreds on Monday.

The deal was upsized from $250 million and came at the tight end of 6% to 6.125% talk.

Ahead of pricing, a trader quoted the issue at $24.87 bid, $24.90 offered.

Another market source also placed the issue around $24.90.

As for the company’s already outstanding preferreds, the 6% series B noncumulative perpetual preferreds (NYSE: SCHWPB) fell 51 cents, or 1.94%, to $25.84.

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

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.

Among other recent deals, a trader said JPMorgan Chase & Co.’s $1.1 billion of 6.15% series BB noncumulative preferreds – a deal priced Wednesday via J.P. Morgan Securities LLC – had been assigned a temporary trading symbol, “JMPRP.”

The trader quoted that issue at $24.75 bid, $24.80 offered at mid-morning. At the close, the paper was seen at $24.80, down 10 cents on the day but up a penny from the open.

Also, DynaGas LNG Partners LP’s $75 million of 9% series A cumulative redeemable preferred units – a deal priced July 13 – listed on the New York Stock Exchange on Monday.

The units declined to $22.25 versus opening levels of $23.90.

Weakness in that name came as benchmark crude oil declined over 2%.

Morgan Stanley ran the books on the non-rated deal. Other joint bookrunners included Credit Suisse Securities (USA) Inc., Stifel Nicolaus & Co. and DNB Markets.

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