Yellen’s remarks lift preferreds; Deutsche, other banks rebound; Senior Housing prices

By Stephanie N. Rotondo

Seattle, Feb. 10 – The preferred stock market was rebounding 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 ended up 82 basis points. 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 90 cents, or 4.16%, at $22.55. The 6.55% TruPs (NYSE: DXB) improved $1.41, or 7.02%, to $21.50.

And, the 8.05% TruPs (NYSE: DKT) gained 72 cents, or 3.22%, to end at $23.05.

Other foreign banks were also in rebound mode.

Royal Bank of Scotland Group plc’s 5.9% noncumulative guaranteed trust preferred securities (NYSE: RBSPE) rose 52 cents, or 2.32%, to $22.91, while the 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) gained 62 cents, or 2.77%, to close at $23.01.

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 on the news.

Senior Housing prices

The new issue calendar saw its first deal of the week added on Wednesday, as Senior Housing Properties Trust launched a $100 million offering of $25-par senior notes due 2046.

The deal came upsized at $250 million and at 6.25%, the tight end of talk.

Initial price talk was 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. Jefferies & Co. is joint lead manager.

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

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