Southern Co. gets temporary symbol; TravelCenters to list; Targa Resources frees to trade

By Stephanie N. Rotondo

Phoenix, Oct. 8 – The preferred stock market finished firm again on Thursday after starting the day with a modestly weaker tone.

The Wells Fargo Hybrid and Preferred Securities index closed up 10 basis points. The index was down 1 bp at mid-morning.

As such, recently priced deals continued to do better.

The Southern Co.’s $1 billion of 6.25% $25-par series 2015A junior subordinated notes due 2075 moved up again, according to a trader.

The trader pegged the issue at par bid, $25.10 offered. A second market source saw the notes closing at $25.10, with a volume weighted average price of $25.05.

The notes were assigned a temporary trading symbol as well, “SOJA.”

The issue priced Oct. 1, with $875 million notes being sold. On Tuesday, it was reported that a $125 million greenshoe was exercised in full, lifting total issuance to $1 billion.

TravelCenters of America LLC’s $100 million of 8% $25-par senior notes due 2030 were also seen improving, with a trader seeing the notes at $24.85 bid, $24.95 offered.

That issue came Sept. 30.

The paper is expected to list on the New York Stock Exchange on Friday under the ticker symbol “TANP.”

Meanwhile, Targa Resources Partners LP’s $110 million of 9% series A fixed-to-floating rate cumulative redeemable perpetual preferred units – an issue that priced late Wednesday, coming upsized from $75 million – freed to trade at mid-morning, a trader reported.

He quoted the units at $24.60 bid, $24.68 offered.

Another source said VWAP was $24.62, which was “toward the low end of the day.”

Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

Fannie, Freddie abuzz

Fannie Mae and Freddie Mac preferreds again dominated overall trading on Thursday. A market source said that while there have been a lot of stories circulating as to why the shares have been trading so much, he said most of it was “a lot of posturing, with Fairholme and Ackman on the one side and the government, Treasury and the regulators that are all the other side of the equation.”

He further opined that it was the hedge funds that have been behind the recent spin.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) inched up a penny to $5.16, as the variable rate series O noncumulative preferreds (OTCBB: FNMFN) popped 40 cents, or 4.35%, to $9.60.

However, Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) continued to be steady at $5.12.

Earlier in Thursday’s session, a trader remarked that the GSE preferreds were “all up 20 cents across the board” on news that shareholders had hired a former Delaware judge to argue their case. Chatter is that the hiring could be positive, given that as a former judge, the new attorney has a wealth of Delaware business law knowledge.

Another source, however, said there wasn’t anything new to that story. But he did note that there has been speculation that Utah Rep. Jason Chaffetz – currently in the running for Speaker of the House – is pushing for the government to make all documents related to the agencies’ made public.

“That could be a boost for the hedge funds or a killer,” the source said. It would seem, he added, that Chaffetz has been in talks with those funds that are suing the federal government over its conscription of a majority of the GSEs profits.

All the buzz has been interesting, the source said, given that “the word earlier [in the week] from [Sen. Bob] Corker was that nothing was getting done [on GSE reform] until after the elections.”

As the New York Post reported Thursday, an independent report from Political Alpha was released on Tuesday and indicated that the White House was considering flipping its position on how to handle the mortgage giants. Instead of liquidating them, the White House is supposedly looking into reviving them.

Corker addressed that report in a CNBC interview on Tuesday, deeming the notion as “major BS.”

Still, all the hubbub has been “keeping [Fannie and Freddie preferreds] actively trading,” the source conceded.

Deutsche Bank down

Late Wednesday, Deutsche Bank reported that it will take $8 billion in charges on its third-quarter results.

Come Thursday, investors were pushing the bank’s preferred issues downward.

The 7.6% trust preferred securities (NYSE: DTK) dropped 62 cents, or 2.27%, to $26.70. The 8.05% trust preferred securities (NYSE: DKT) fell 53 cents, or 1.87%, to $27.77.

The charges are related to Deutsche’s stake in Hua Xia Bank, litigation provisions and goodwill impairment.

The quarterly report is scheduled to be released on Oct. 29.

After the news came out Wednesday, a market source said the rumor was that the German bank would soon begin to cut its dividends.

“The reality is that it is long overdue,” the source said.

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