Pershing Square IPO Targets $5B; Bank of America Preferreds Offer 45–50bps Trade
Bill Ackman’s Pershing Square USA IPO is about 85% covered by institutions and expected to raise $5 billion at the low end of its $5–$10 billion target. Bank of America highlights a pair trade between its fixed-rate preferreds, exploiting a 45–50 basis point yield spread for roughly $1.50 profit per paired share.
1. Pershing Square USA IPO Details
The initial public offering of Pershing Square USA Ltd. is set to price on April 28 and is currently covered at approximately 85% by institutional investors. The offering, which includes a $2.8 billion private placement contingent on reaching a $5 billion minimum, will grant one free share of Pershing Square Inc. for every five closed-end fund shares purchased.
2. Bank of America Preferreds Pair Trade Opportunity
Bank of America’s fixed-rate preferred shares series P and series B present a recurring pair trade, taking advantage of a 45–50 basis point yield spread that could deliver about $1.50 per paired preferred until mean reversion. This trade carries no credit risk but requires active monitoring of borrowing fees and trade mechanics to preserve profitability.