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State Street Corporation to Redeem $1.0B of Preferred Stock in the First Quarter of 2024
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Rhea-AI Summary
State Street Corporation (STT) announced the redemption of $750 million of its non-cumulative perpetual preferred stock, Series D, and $250 million of its non-cumulative perpetual preferred stock, Series F. The redemption will be for cash at a redemption price of $100,000 per share plus all declared but unpaid dividends. Additionally, cash dividends for the Series D and Series F Preferred Stock have been declared for the period leading up to the Redemption Date. After the Redemption Date, no shares of Series D or Series F Preferred Stock will be outstanding.
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Insights
The redemption of preferred stock by State Street Corporation represents a strategic financial decision, impacting the company's capital structure and potentially its creditworthiness. By redeeming its Series D and Series F Preferred Stock, State Street is indicating a shift in its capital allocation strategy. The action to redeem at a fixed price plus accrued dividends suggests a move to manage or reduce the company's cost of capital. This can be advantageous for common shareholders as it may lead to a reduction in dividend obligations and could potentially improve earnings per share.
However, this move also implies that State Street is confident in its liquidity position and cash flow stability, as redeeming preferred stock requires a significant cash outlay. Investors and analysts will likely scrutinize the company's balance sheet and cash flow statements in subsequent quarters to assess the impact of this redemption on financial flexibility and overall financial health.
From a market perspective, the redemption of preferred stock can be interpreted as a signal of strength, indicating that State Street may be optimizing its capital structure for better financial efficiency. The market's reaction to such news typically depends on the broader context of the company's financial performance and market conditions. If the redemption is seen as a move to deleverage or to reallocate capital towards more productive investments, the stock price could react positively.
Conversely, if the market perceives this redemption as a means to shore up capital at the expense of future growth opportunities, the reaction could be less favorable. It is essential to monitor peer actions and market trends to understand how this redemption fits within the industry landscape and investor expectations.
The redemption of preferred stock also has implications from an economic standpoint. It reflects the company's response to the macroeconomic environment, including interest rates and the cost of borrowing. In a rising interest rate environment, redeeming higher-cost preferred stock could be a cost-saving measure. This action may also indicate the company's outlook on future economic conditions and its strategic response to anticipated changes in the monetary policy landscape.
Furthermore, the redemption could affect the supply-demand dynamics in the preferred stock market, particularly if State Street's preferred shares were a significant portion of the market. The removal of these securities could potentially alter the yield curve for preferred stocks, affecting the valuation of similar instruments in the sector.
BOSTON--(BUSINESS WIRE)--
State Street Corporation (NYSE:STT) today announced that it will redeem $750 million, or all of its 7,500 outstanding shares, of non-cumulative perpetual preferred stock, Series D (“Series D Preferred Stock”) (represented by 30,000,000 depositary shares, each representing a 1/4000th interest in a share of Series D Preferred Stock) on March 15, 2024 (the “Redemption Date”), for cash at a redemption price of $100,000 per share (equivalent to $25 per depositary share) plus all dividends that have been declared but not paid up to but not including the Redemption Date (the “Series D Redemption Price”). Additionally, State Street Corporation will redeem $250 million, or all of the remaining 2,500 outstanding shares, of non-cumulative perpetual preferred stock, Series F (“Series F Preferred Stock”) (represented by 250,000 depositary shares, each representing a 1/100th interest in a share of Series F Preferred Stock) on the Redemption Date, for cash at a redemption price of $100,000 per share (equivalent to $1,000 per depositary share) plus all dividends that have been declared but not paid up to but not including the Redemption Date (the “Series F Redemption Price”).
As previously announced, (i) a cash dividend of $1,475.00 per share of Series D Preferred Stock (or approximately $0.368750 per depositary share) (the “Series D Dividend”) has been declared for the period from December 15, 2023 up to but not including the Redemption Date and (ii) a cash dividend of $2,336.49 per share of Series F Preferred Stock (or approximately $23.364900 per depositary share) (the “Series F Dividend”) has been declared for the period from December 15, 2023 up to but not including the Redemption Date (together, the “March Dividends”). The March Dividends will be paid separately to the holders of record of the Series D Preferred Stock and the Series F Preferred Stock as of February 29, 2024 in the customary manner on the Redemption Date. Accordingly, the Series D Dividend will not be included in the Series D Redemption Price and the Series F Dividend will not be included in the Series F Redemption Price. From and after the Redemption Date, no shares of Series D Preferred Stock and no shares of Series F Preferred Stock will be deemed outstanding and the only remaining rights of the holders of the Series D Preferred Stock and the Series F Preferred Stock will be to receive payment of the Series D Redemption Price or Series F Redemption Price, as applicable.
About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world’s leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $41.8 trillion in assets under custody and/or administration and $4.1 trillion* in assets under management as of December 31, 2023, State Street operates globally in more than 100 geographic markets and employs approximately 46,000 worldwide. For more information, visit State Street’s website at www.statestreet.com.
*Assets under management as of December 31, 2023 includes approximately $64 billion of assets with respect to SPDR® products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.
Forward Looking Statements
This press release contains forward-looking statements that are not historical in nature. Such forward-looking statements are subject to risks and uncertainties, including competitive factors, government regulation and general economic conditions and other risks and uncertainties described in State Street’s periodic reports on file with the U.S. Securities and Exchange Commission including the most recent Annual Report on Form 10-K of State Street, as filed with the U.S. Securities and Exchange Commission. In some cases, you can identify these statements by forward-looking words, such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “plan,” “possible,” “potential,” “project,” “should,” “will,” and similar words or expressions, the negative or plural of such words or expressions and other comparable terminology. Actual results may differ materially from anticipated results. State Street does not undertake to update its forward-looking statements or any of the information contained in this press release, including to reflect future events or circumstances.
What is the ticker symbol for State Street Corporation?
The ticker symbol for State Street Corporation is STT.
What is the redemption price for the Series D Preferred Stock?
The redemption price for the Series D Preferred Stock is $100,000 per share.
When will the redemption of the preferred stock take place?
The redemption of the preferred stock will take place on March 15, 2024.
What dividends have been declared for the Series D and Series F Preferred Stock?
A cash dividend of $1,475.00 per share of Series D Preferred Stock and a cash dividend of $2,336.49 per share of Series F Preferred Stock have been declared for the period leading up to the Redemption Date.
What will happen to the Series D and Series F Preferred Stock after the Redemption Date?
After the Redemption Date, no shares of Series D Preferred Stock and no shares of Series F Preferred Stock will be deemed outstanding.
