Preferred stocks flat on jobs report; Bluerock deal frees to trade; Deutsche Bank mixed

By Stephanie N. Rotondo

Seattle, Oct. 7 – The preferred stock market was subdued in the wake of the release of the latest jobs number on Friday.

“Generally, most of our stuff is unchanged,” a trader said.

In its latest report, the Labor Department said 156,000 jobs were added in September. That followed a 167,000 increase in August.

However, the figure was lower than the 172,000 add forecast by economists.

Additionally, the jobless rate ticked up to 5% from 4.9%.

The Wells Fargo Hybrid and Preferred Securities index finished 1 basis point higher, though it was up 6 bps at mid-morning.

As for the week’s slew of new deals, a trader said that “it seems like a lot of the bids were pulled on these in the gray market.” As such, the new issues were not trading all that well.

From Thursday’s business, Public Storage’s $350 million of 4.9% series E cumulative preferreds were seen at $24.68 bid.

The deal was upsized from $100 million but came in line with the 4.9% price talk.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC ran the books.

Also from Thursday, Chimera Investment Corp.’s $135 million of 8% series A cumulative redeemable preferreds were “not free yet,” according to a trader.

The trader pegged the paper at $24.57 offered.

“Very soft on those,” he said.

The deal was upsized from $75 million. Price talk on the non-rated deal was 8% to 8.125%.

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

Bluerock Residential Growth REIT Inc.’s $67.5 million of 7.125% series D cumulative preferreds – a deal priced Wednesday – had freed to trade, a trader reported.

The preferreds were seen at $24.60 bid, $24.75 offered at mid-morning.

Janney Montgomery Scott LLC, D.A. Davidson & Co. and Oppenheimer & Co. led the deal.

And, National Retail Properties Inc.’s $300 million of 5.2% series F cumulative redeemable preferreds were “holding up better” than the other deals from the week, according to a trader.

He quoted the issue at $24.80 bid, $24.85 offered.

The deal priced Tuesday, coming upsized from $200 million and tight to the 5.25% price talk.

Wells Fargo, BofA Merrill Lynch and Morgan Stanley ran the books.

Deutsche ends mixed

After gyrating all week, Deutsche Bank AG’s preferreds ended mixed on Friday.

The 7.6% trust preferred securities (NYSE: DTK) rose 11 cents to $24.31, while the 8.05% TruPS (NYSE: DKT) were steady at $24.88.

And the 6.55% TruPS (NYSE: DXB) declined 9.5 cents to $22.985.

Earlier in the week, German news outlets were citing unnamed sources that said several companies were in talks to give Deutsche Bank the capital it may need to deal with its U.S. settlement regarding its role in the subprime mortgage crisis. That figure was being talked in the low, single-digit billion euro range.

The bank could need the rescue, especially as the German government is reportedly not planning any sort of bailout. And as talks with the U.S. Department of Justice are said to not be going well, there remains uncertainty about how much Deutsche Bank could be on the hook for.

To add to the slew of negativity surrounding the financial institution, Deutsche Bank said on Thursday that it was cutting another 1,000 jobs – in addition to the 3,000 job cuts announced in June.

On Friday, it was reported that Qatari investors were not interested in divesting their stake and that they might be interested in injecting more cash, should the bank need it.

Also on Friday, S&P Global Ratings said that while it believed the DOJ settlement would be more than $5.4 billion, it would also likely be less than the $14 billion originally proposed.

The ratings agency – which affirmed its BBB+/A-2 on the bank – also said it believed Deutsche Bank would have enough capital to cover the settlement.

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