So-called preferred securities, which are one of the riskiest forms of debt but also have some characteristics of stocks, are popular among banks as a way to boost their capital for regulatory purposes.
More than $160 billion of preferreds were issued in 2020 and 2021 each, when rates were low.
Volume dropped last year to $70 billion as the U.S. Federal Reserve embarked on an interest rate hiking cycle.
When Wells Fargo & Co (WFC.N) issued a new public preferred security earlier this month, investor demand far outweighed supply.
The $1.725 billion deal received orders of over $6 billion, bringing total issuance for the year to $37 billion.
Persons:
preferreds, Wells, ”, Daniel Botoff, Allie Quine, Cohen, Steers, Quine, WELLS, Wells Fargo, RBC's Botoff, Shankar Ramakrishnan, Paritosh Bansal, Matthew Lewis
Organizations:
U.S . Federal Reserve, Credit Suisse, UBS Group, Wells Fargo & Co, Treasury, RBC Capital Markets, Informa Global, Thomson
Locations:
U.S, preferreds, New York