Ohio banker Huntington Bancshares (HBAN) has priced their new issue of preferred stock.
The issue prices at 4.50%–about where expected. The issue is rated split investment grade—investment grade from Moody’s at Baa3, BB+ from Standard and Poor’s and Fitch.
They are selling 20 million shares. The company says they may call preferred shares with proceeds of this issue–there is near adequate funding from this new issue to call the 5.875% issue (HBANN) immediately and the 6.25% issue (HBANO) in April.
The issue will begin trading under temporary OTC ticker HBANL immediately.
The pricing term sheet can be read here.
HBANO and HBANN are both callable next on April 15, 2021.
Looks like investors doubt HBANN is going to be called as it is trading at $25.9x-$26 right now and betting the that the higher 6.25% coupon HBANO is likely to be called as it is trading $25.3x.
If one goes to stockcharts.com and looks at PFF, one will see a very dangerous bear pattern — the MACD line is following the signal line lower without much price deterioration. My best guess is that rates are headed higher and many preferred stocks potentially are very hazardous — especially low yielding perpetual preferred securities.