Preferreds end week with firm tone; Global Indemnity so-so post-pricing; recent issues rise

By Stephanie N. Rotondo

Seattle, March 17 – Preferred stocks held on to the gains incurred over the week in the wake of the Federal Reserve’s decision to raise interest rates by ¼ point.

The Wells Fargo Hybrid and Preferred Securities Index added 19 basis points. The U.S. iShares Preferred Stock ETF improved 13 bps.

Global Indemnity Ltd.’s new $120 million of 7.875% $25-par subordinated notes due 2047 – a deal priced late Thursday – was only somewhat following the day’s upward trend.

A market source saw the notes closing at $24.59, though the volume weighted average price was a little higher at $24.64.

In early trading, a trader saw the issue at $24.55 bid. Though that wasn’t a remarkable performance, the trader opined that it would improve.

“That’s how that Two Harbors [Investment Corp. deal] was when it came out,” the trader noted. But in recent days, the Two Harbors paper – a $125 million issue of 8.125% series A fixed-to-floating rate cumulative redeemable preferreds (NYSE: TWOPrA) that priced March 7 – has pushed up dramatically.

In fact, Two Harbors was seen at $25.38 in early dealings, a gain of 20 cents on the day.

The Global Indemnity deal is expected to free to trade on Monday, according to a trader.

Morgan Stanley & Co. LLC, UBS Securities LLC and RBC Capital Markets ran the books.

The deal came upsized from $75 million and at the tight end of the 7.875% to 8% price talk.

There is an over-allotment option exercisable for 30 days to increase the offering by a further $18 million.

Interest will be payable quarterly.

The notes become redeemable on April 15, 2022 at par plus accrued interest.

The new securities will be listed on the Nasdaq Global Select Market under the ticker symbol “GBLIL.”

The Cayman Islands-based insurance company will use proceeds for general corporate purposes, including financing acquisitions, ordinary share repurchases, debt repayment and net underwriting capacity expansion.

Meanwhile, New York Community Bancorp Inc.’s $500 million of 6.375% series A fixed-to-floating rate noncumulative preferreds continued to rise, pushing past the $26-mark in Friday trading.

The preferreds ended the day at $26.12, up 17 cents.

The deal came to market on March 10. It is trading under a temporary ticker, “NYBCP.”

The bank announced Friday that $15 million of the $75 million greenshoe had been exercised.

Among more established issues, Deutsche Bank AG’s 6.55% trust preferred securities (NYSE: DXB) were busy and better.

The TruPS improved 6 cents to close at $24.98.

Goldman Sachs Group Inc.’s 5.95% series I noncumulative preferreds (NYSE: GSPrI) meantime added 8 cents to finish at $25.90.

Morgan Stanley & Co. Inc.’s 5.85% series K fixed-to-floating rate noncumulative preferreds (NYSE: MSPrK) were also active in the final trading day of the week. But unlike most of the preferred space, the issue ended off 2 cents at $25.65.

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