Teekay LNG frees to trade; City Office firms; AmTrust lists; Deutsche Bank weakens again

By Stephanie N. Rotondo

Seattle, Sept. 29 – Preferred stocks were coming in on Thursday, initially trading flat to slightly weaker. However, by the end of the day, the market had fallen off quite seriously.

The Wells Fargo Hybrid and Preferred Securities index closed down 91 basis points. It was down 1 bp at mid-morning.

A trader said he had not heard of any more new deals for the week.

But as for the deals already priced during the week, Teekay LNG Partners LP’s $125 million of 9% series A cumulative redeemable perpetual preferred units freed to trade, according to a market source.

The issue came Wednesday, in line with price talk.

A source saw the issue at $24.65 at the close. A trader had pegged the units at $24.65 bid, $24.75 offered in early trading.

Meanwhile, City Office REIT Inc.’s $100 million of 6.625% series A cumulative redeemable preferreds – a deal priced Tuesday – were also free to trade, a source reported.

The paper ended at $24.95, after being quoted at $24.90 bid, $24.95 offered earlier in the day.

The preferreds had ended Wednesday’s session at $24.90.

The issue has a temporary symbol, “CYORP.”

From last week’s business, AmTrust Financial Services Inc.’s $287.5 million of 6.95% series F noncumulative preferred stock was admitted to the New York Stock Exchange on Thursday, as was expected.

The ticker is “AFSIPF.” Paper was trading at $25.27 at mid-morning, down from opening levels of $25.31. It closed at $25.24.

The deal priced Sept. 20.

Price talk was 7% to 7.125%.

Deutsche decline continues

Deutsche Bank AG’s trust preferreds continued to be notable on Thursday, easily dominating trading in any other security – new issue or otherwise.

But after regaining some ground in midweek trading, the paper continued its downward descent on Thursday as Bloomberg reported that some hedge funds were cutting exposure to the German bank.

The 7.6% trust preferred securities (NYSE: DTK) lost $1.07, or 4.47%, to end at $22.85. About 3.21 million of the securities changed hands.

The 8.05% TruPS (NYSE: DKT) were meantime off $1.36, or 5.5%, at $23.37, with nearly 2.31 million preferreds trading.

The 6.55% TruPS (NYSE: DXB) declined 90 cents, or 3.89%, to $22.23. Almost 1.17 million of those preferreds were exchanged.

At least 10 hedge funds have taken their derivatives holdings elsewhere, Bloomberg reported, including Izzy Englander’s $34 billion Millennium Partners, Chris Rokos’s $4 billion Rokos Capital Management, and the $14 billion Capula Investment Management. But Barry Bausano, chairman of Deutsche’s hedge fund business, attempted to assure investors that all was well in an interview with CNBC.

In the interview, Bausano said the brokerage was “still very profitable,” and put the bank’s current weakness down to a “perception issue.”

He also noted that the fund outflows were fractional compared to the overall amount of clients.

There were a slew of headlines out Wednesday that seemed to ease investors’ concerns about the company’s financial strength, especially as it deals with litigation regarding its role in the subprime mortgage crisis. The headlines had given the preferreds a reprieve from its recent string of losses.

For instance, John Cryan, chief executive officer, gave an interview with the German newspaper Bild in which he said the need for a state bailout was “not an issue.”

The company itself announced that it had sold off its British insurance unit Abbey Life to Phoenix Group Holdings for the equivalent of $1.22 billion. That encouraged investors, who were looking for signs that Deutsche Bank intended to sell non-core assets.

Another German news outlet, Die Zeit, reported that German officials were already in talks regarding a rescue plan for the struggling bank. However, it was later reported that there was no such plan in the works.

Recently, the U.S. Department of Justice proposed a $14 billion settlement to the bank in regards to an investigation tied to the bank’s role in the subprime mortgage crisis. Deutsche Bank has said it will not accept that offer but instead will negotiate to a settlement amount similar to those given to its U.S. peers.

© 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.