Giant banker Wells Fargo and Company (WFC) is selling a new preferred stock.
As is typical for WFC the issue will be non-cumulative, qualified and investment grade.
The company MAY use the proceeds to call preferred stock per their ‘use of proceeds’ statement. The company has many currently outstanding preferred issues including a few with coupons of over 5% which are currently redeemable–they can be seen here.
The preliminary prospectus can be read here.
EarlyBird got the worm on this one.
5 thoughts on “Wells Fargo & Co to Sell New Preferred”
Sounds like we better start to accept 4% as a reality…if you can even buy it under call. Makes you wonder if all that inflation talk was bogus. Although, Arby’s does have the 5 for $10 now instead of the 5 for $5….took 20yrs.
Don’t forget something called common stock. It comes with more volatility usually but the ylds in many cases are now higher than preferred. You just need a good entry point and a long horizon.
4% with no real upside isn’t so hot. The inherent optionality in preferreds is working against many issues right now. If rates go to nothing you get called in 5 years and if they go higher you end up with a $15 price and your 4%.
I totally agree with your view on low 4 coupons…. but that’s always been the case. I remember Dominion issuing new 8% preferreds and a senior advisor felt the need to warn everyone. “Heads you win tails you lose”…I did them anyway they ended up working out ok.
My take is you might want to own some of these at this rate. Say 10-15% of your holdings just in case rates stay here much less drop further But yeah a 5% or higher coupon w a 3 ytc is more interesting to me then a 4 at par
That was wayyyy below preliminary indications.
priced @ 4.375