Financials fall; Pennsylvania REIT lists; Morgan Stanley better; Just Energy lackluster

By Stephanie N. Rotondo

Seattle, Feb. 1 – The preferred stock market was flat in midweek trading, and a trader said there was “a lot of talk” about a possible Dodd-Frank repeal.

The issue of the legislation started to come into focus on Monday, when the new president said that he aimed to do a “big number” on the legislation, deeming it a “disaster” that has inhibited small business growth.

The trader said he had heard that there was a bill circulating that would “allow banks to do what they were doing” ahead of the financial crisis, but added that “it looks like it is going to die on the floor.”

Also notable for the day was the Federal Reserve’s announcement that it was holding interest rates steady for the time being, though it believed that there remained positive signs in the economy.

Still, financials were softer in the wake of the news.

With only a few days left in the week, a trader said the primary could see a new issue on Thursday, though he wasn’t sure from whom.

Among recent deals, Pennsylvania Real Estate Investment Trust’s $172.5 million of 7.2% series C cumulative redeemable preferreds began trading on the New York Stock Exchange on Wednesday.

The ticker is “PEIPrC.”

The paper was seen at $25.10 at the close, compared to $25.11 at mid-morning.

The preferreds opened at $25.15.

The deal priced Jan. 18.

Wells Fargo Securities LLC, Citigroup Global Markets Inc., Jefferies, J.P. Morgan Securities LLC and Stifel Nicolaus & Co. Inc. ran the books.

Meanwhile, Morgan Stanley & Co. Inc.’s $1 billion of 5.85% series K fixed-to-floating rate noncumulative preferreds closed at $25.22, which was up 10 cents from the previous session but unchanged from the open.

That deal came Jan. 24.

From Monday’s business, Just Energy Group Inc.’s $100 million of 8.5% series A fixed-to-floating rate cumulative redeemable preferreds had yet to gain any traction, according to a trader.

The trader said the preferreds were offered at $24.55.

Financials falter

Financials were weak in midweek trading in the wake of the Fed’s latest policy announcement.

Capital One Financial Corp.’s 5.2% series G noncumulative preferreds (NYSE: COFPrG) fell 12 cents to $22.20. State Street Corp.’s 5.35% series G fixed-to-floating rate noncumulative preferreds (NYSE: STTPrG) declined 14 cents to $25.33.

Even foreign financials were affected, as Deutsche Bank AG’s 7.6% trust preferred securities (NYSE: DTK) dipped 8 cents to $25.49.

Citigroup Inc., however, was mixed at the end of the session.

The 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPrN) finished up 12 cents, while the 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPrK) slipped 7 cents to $27.31.

Fannie, Freddie active

Fannie Mae and Freddie Mac preferreds continued to dominate the trading day, though the GSEs ended mixed.

The 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) rose 23 cents, or 2.48%, to $9.50, on 1.02 million shares traded. The 8.25% series T noncumulative preferreds (OTCBB: FNMAT), however, declined 15 cents, or 1.59%, to $9.30.

About 295,000 of those preferreds changed hands.

In Freddie paper, the 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) finished up 12 cents, or 1.36%, at $8.97.

Approximately 2.11 million shares traded.

On Monday, the Court of Appeals unanimously ruled that of the 56 sample documents reviewed from the Treasury, 48 should be turned over to the plaintiffs, Fairholme Funds

The ruling piggy-backs on judge Margaret M. Sweeney’s decision last year, which called for the Treasury to turn over the documents it had previously tried to designate as privileged in one way or another.

The documents in question are related to the Treasury’s argument that the 2012 “net worth sweep” was necessary in order to protect taxpayers. Papers unsealed last year have thus far cast doubt on that defense.

Without knowing what those documents included, a market source told Prospect News on Monday that it was unclear whether or not the ruling would ultimately be positive or negative for shareholders.

“Both sides will probably appeal,” he remarked.

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