Wells Fargo and Company Sells a New Preferred Issue
By: Tim McPartland,
Banking company Wells Fargo has sold a new investment-grade preferred stock offering that began trading on the OTC Grey Market on Jan. 21.
As a banking organization, Wells Fargo’s new issue is required to be non-cumulative. That structure means that if the dividends are not declared, they are gone forever.
As usual with such issues, the shares are perpetual and therefore do not have a maturity date. The issue has a normal, five-year optional redemption. As a result, the company can redeem the shares of its option as early as March 15, 2021.
Typically, the issuer will redeem the shares in what we call a “refinancing” transaction on the optional redemption date if the company can issue new shares at a coupon at least ¼ to ½% below the coupon on the previously issued shares.
Complete details of this issue are available here.
To compare this issue with other Wells Fargo and Company preferred issues outstanding, you easily can check them on our “swaps” page. The company has seven other issues outstanding.
For those interested in buying on the OTC Grey Market, we have a “primer” on the process which you can access at this link.