Morning Commentary: BNY Mellon plans sale of $1,000-par noncumulatives; Capital One on tap

By Stephanie N. Rotondo

Seattle, July 25 – Chatter of a possible preferred stock deal planned for Monday proved correct, as Bank of New York Mellon Corp. announced an offering of $1,000-par series F fixed-to-floating rate noncumulative preferreds.

Price talk is 4.875%, according to a market source.

A trader said he had yet to see any markets for the paper, though he commented that “I imagine it’s going to trade at a premium right away, because most of the $1,000-pars usually do.”

BofA Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, UBS Securities LLC and BNY Mellon Capital Markets LLC are running the books.

Proceeds will be used to fund a common stock repurchase plan of up to $560 million. The repurchases will be proportionally reduced should the New York-based financial services firm sell less than $750 million of the new preferreds.

Any remaining funds will be used for general corporate purposes.

Last week, market sources had been reporting that there was talk of a new issue from a financial company, but it wasn’t clear who it would be.

New issue buzz continued on Monday, as well.

Capital One Financial Corp. was expected to price an offering of subordinated notes on Monday, according to a 424B5 filed with the Securities and Exchange Commission.

Bookrunners are Citigroup, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley and Capital One Securities.

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