Preferreds edge higher, retreat to end the day flat; trader foresees active pipeline

By Stephanie N. Rotondo

Phoenix, April 3 - The preferred stock market was again on the quieter side early Thursday, but the market was attempting to regain the ground lost in the previous session.

By mid-morning, the Wells Fargo Hybrid and Preferred Securities index was inching up 3 basis points. It had closed on Wednesday down 16 bps.

A market source said after the bell that the market was bouncing around most of the day, starting up a touch but ending down a tad, with the index closing off 1 bp.

A trader said he was hearing that there were "a couple deals in the works for next week," though he wasn't sure exactly who would be the issuers.

"I think this month could be pretty active," he said of the primary, given that the market was so cheap to raise money in. "We could see a lot of refinancings going on."

He noted that the pipeline could pick up once first-quarter earnings begin to roll out next week.

Though overall volume was muted, real estate investment trust preferreds were trending toward the active side.

CoreSite Realty Corp.'s 7.25% series A cumulative redeemable preferreds (NYSE: CORPA) were down a nickel at $24.95 in early trading but managed to recover those losses to finish flat at par.

Digital Realty Trust Inc.'s 7.375% series H cumulative redeemable preferreds (NYSE: DLRPH) were meantime initially up 4 cents at $24.98 but closed flat at $24.94.

For its part, Digital Realty announced plans for a $50 million tap of the series H preferreds on Wednesday. The original $300 million deal priced March 19.

Among other REITs, American Realty Capital Properties Inc.'s 6.7% series F cumulative redeemable preferreds (Nasdaq: ARCPP) ended the day up 2 cents at $22.82.

Wells Fargo busy, strong

Wells Fargo & Co.'s preferreds were busy and better on the day.

The 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) put on 6 cents to end at $24.99. The 6.625% series R fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPR) closed up 7 cents at $27.62.

One market source said he was not sure that there was a specific reason for the activity, though he noted that Standard & Poor's was slated to announce a rebalancing that could affect those issues. But once the rebalancing was announced, neither issue made the list.

However, included in the list were Digital Realty's 7.375% series H preferreds and American Realty Capital's 6.7% series F preferreds.

He also remarked that perhaps the bank was gearing up for a new issue post-earnings.

The San Francisco-based bank is scheduled to release its first-quarter results on April 11.

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