Two banks are retiring a billion dollars of preferred stock apiece, and each has picked the exact day its coupon would have stopped being fixed
Two billion dollars of bank preferred stock is being called this month, and the two calls were filed eight minutes apart.
Bank of New York Mellon filed first, at 9.13 on Thursday morning. Capital One followed at 9.22. Each is retiring a single series with a face value of $1bn, and each has chosen a redemption date that is also the last day of that security's fixed coupon.
Capital One will redeem all 1,000,000 outstanding shares of its Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series M, on 1 September, at $1,000 a share. The regular dividend of $9.875 per share is paid separately on the same day, to holders of record on 17 August, so the redemption price carries no accrued dividend at all. The company's most recent quarterly report sets out what 1 September was already going to be for this security. Series M has paid 3.950 percent since June 2021. That rate runs through 31 August. On 1 September it resets, and resets again every fifth anniversary, at the five-year Treasury rate plus 3.157 percentage points.
The same table gives 1 September as the first date the issuer may redeem. So the reset date and the first call date are the same day, and the company has taken the second one.
What the spread is worth at Wednesday's rate
Treasury's daily par yield curve closed the five-year point at 4.35 percent on 19 August, the most recent reading published. Add the 3.157 point spread to that and the sum is 7.507 percent, against 3.950 percent now. That is arithmetic on Wednesday's curve rather than the reset rate itself, which is fixed off a determination date shortly before 1 September and is not yet set. Neither filing offers a reason for the redemption, and none is supplied here.
BNY, three weeks later and one benchmark across
The BNY security is structured differently and lands in the same place. Series F consists of 10,000 shares at a liquidation preference of $100,000 each, held by the public through 1,000,000 depositary shares at a hundredth apiece. Those will be redeemed at $1,000 per depositary share on 20 September, with payment on 21 September, the first business day after. As at Capital One, the dividend payable that day sits outside the redemption payment.
Note 10 of the bank's quarterly report describes the coupon in a single line: 4.625 percent to but excluding 20 September 2026, then SOFR plus 3.131 percentage points. The reference is three-month CME Term SOFR with a spread adjustment of 0.26161 percent, which is a licensed publication this desk did not obtain, so no figure is put on what the floating rate would have been.
The same table records the last one
Two rows above Series F sits Series H, which paid 3.700 percent to but excluding 20 March 2026 and then a floating rate of the five-year Treasury rate plus 3.352 points. It had 5,825 shares outstanding at the end of December and none at the end of June. The narrative under the dividend table says the parent redeemed all of them in June, and that $6m of deferred fees were realised as preferred dividends when it did.
In March, the month Series H stopped being fixed, BNY issued a new series. Series M pays 5.625 percent, fixed until March 2031, and cannot be called before then. Both movements are in the same note, four lines apart.
Any of this requires permission. In describing Series M, the filing states plainly that redemption of the preferred stock is subject to the prior approval of the Federal Reserve.
The third data point of the week is a different bank going the other way. Wells Fargo priced a new perpetual preferred series on Wednesday at 6.55 percent fixed to September 2031, and sold the whole authorisation.
