US Bancorp Preferred Soars as Capital Rule Spurs Buyback Bet (1)

A 20-year-old preferred security by a US Bancorp entity has turned into a hot ticket, surging 15% this year on the back of a regulatory quirk even as most financial markets are reeling.

The last recorded trade on the $450 million issue from USB Realty Corp. was struck at 91.7 cents on the dollar last week, Trace data shows, hitting its highest level since mid-2015. It was indicated at around 80 cents on the dollar at the start of the year, before traders sniffed the opportunity to buy the discounted security ahead of a price spike.

The crux of the ...