Morning Commentary: Yellen’s remarks lift preferreds; Deutsche Bank rebounds; Senior Housing on tap

By Stephanie N. Rotondo

Seattle, Feb. 10 – The preferred stock market was rebounding early Wednesday as Federal Reserve chairman Janet Yellen spoke before the House Committee on Financial Services.

“Everything is bouncing back from yesterday’s lows,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index was up 97 basis points at mid-morning. That erased nearly all of the index’s losses from Tuesday, though it is still down for the week.

The trader said that in her speech, “Yellen basically came out and said that our banks are strong and the Fed is not going to raise rates until things solidify here and abroad.”

Yellen said that domestically, there continue to be signs of growth. However, she acknowledged issues in the rest of the world and conceded that said issues – such as China’s slowing growth – could have a negative impact if conditions worsen.

That news, combined with word of a potential bond buyback late Tuesday, was helping push up Deutsche Bank AG’s recently belabored paper.

The 7.6% trust preferred securities (NYSE: DTK) were up $1.28, or 5.92%, at $22.93.

Later in Tuesday’s session, it was reported that the German bank was considering buying back up to €50 billion of debt. Though the preferreds were still weak at Tuesday’s bell, they had pared their intraday losses amid the news.

Meanwhile, the new issue calendar saw its first deal of the week added, as Senior Housing Properties Trust said it planned to sell $100 million of $25-par senior notes due 2046.

Price talk is 6.25% to 6.375%, according to a market source.

A trader saw the notes at $24.60 bid in the early gray market.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC, Wells Fargo Securities LLC, Citigroup Global Markets Inc. and RBC Capital Markets LLC are the joint bookrunners. Jeffries & Co. is a joint lead manager.

BB&T Capital Markets, Janney Montgomery Scott LLC, Oppenheimer & Co. and FBR Capital Markets are the co-managers.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.