Morning Commentary: Preferred stocks rally; City Office deal upsized; Deutsche Bank still down

By Stephanie N. Rotondo

Seattle, Sept. 27 – Preferred stocks were rebounding from Monday’s lows as Tuesday’s trading session got underway.

The Wells Fargo Hybrid and Preferred Securities index was up 16 basis points at mid-morning. The index closed down 31 bps on Monday.

In the primary market, City Office REIT Inc. priced its previously announced offering of series A cumulative redeemable preferreds. The deal came upsized at $100 million – versus the expected $75 million – and priced at 6.625%, in the middle of the 6.5% to 6.75% talk.

A trader quoted the issue at $24.96 bid, $25.02 offered.

Raymond James & Associates Inc., Wunderlich Securities Inc., D.A. Davidson, Janney Montgomery Scott LLC and Compass Point ran the books.

Among other recent deals, AmTrust Financial Services Inc.’s $287.5 million of 6.95% series F noncumulative preferred stock is expected to hit the New York Stock Exchange on Thursday, a market source said.

The deal is currently trading under a temporary symbol, “AMTRP.”

That paper was trading at $25.30 at mid-morning, up a dime.

The deal priced Sept. 20.

Price talk was 7% to 7.125%.

Morgan Stanley & Co. LLC, UBS Securities LLC, RBC Capital Markets and Keefe Bruyette & Woods Inc. were the joint bookrunners.

As for already-listed issues, Deutsche Bank AG’s trust preferreds continued to lose ground.

The 7.6% trust preferred securities (NYSE: DTK) were off 25 cents, or 1.05%, at $24.16. The 8.05% TruPS (NYSE: DKT) were down 26 cents, or 1.04%, at $23.87, while the 6.55% TruPS (NYSE: DXB) dropped 46 cents, or 1.96%, to $23.05.

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