KeyCorp’s new issue frees to trade, moves above par; DTE listing expected; Vanguard mixed

By Stephanie N. Rotondo

Seattle, Dec. 6 – The preferred stock market was inching higher on Tuesday after starting the week with a slightly softer tone.

The Wells Fargo Hybrid and Preferred Securities index finished up 12 basis points, though it was up 18 bps at mid-morning.

A trader said KeyCorp’s $500 million of 6.125% series E fixed-to-floating rate noncumulative preferreds – a deal priced Monday – freed to trade in early dealings, shooting above par to a $25.05 to $25.10 context.

That compared to $24.93 at Monday’s close.

At the bell, a market source said the paper closed at $25.16, though he deemed the volume weighted average price of $25.065 more accurate.

The source added that there was “sizable volume” in the issue, with about 2.4 million shares trading.

Price talk was in the 6.25% area. The deal was upsized from $250 million.

Meanwhile, DTE Energy Co.’s $280 million of 6% $25-par 2016 series F junior subordinated debentures due 2076 were seen at $24.30 bid, $24.50 offered at mid-morning and at $24.70 at the close.

A trader said that deal – which came Nov. 28 – would be admitted to the New York Stock Exchange “probably tomorrow.”

The symbol is expected to be “DTY.”

Among more established issues, Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were retreating as crude oil prices waned.

The units were off 30 cents, or 7.5%, at $3.70 early in the session but rebounded a bit to end down just 8 cents, or 2%, at $3.92.

The 7.75% series C cumulative redeemable preferred units (Nasdaq: VNRCP) meantime added 2 cents to $4.00, though the units spent most of the day trading under Monday’s closing price of $3.98.

For its part, oil was down about 2% for the day, as OPEC and Russia reported increased output ahead of a planned production cut slated to go into effect at the first of the year.

In GSE preferreds, Fannie Mae and Freddie Mac paper was mixed.

Liquidity in the issues also waned considerably – a trend seen in the overall market as well.

“The panic has subsided and people are trying to figure everything out,” a source said of the session’s limited volume.

As for Fannie and Freddie, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) slipped a nickel to $8.10, with over 306,300 shares trading. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ), however, pushed up 15 cents, or 1.96%, to $7.80.

Nearly 565,500 of those preferreds changed hands.

The volume in the GSE paper was notable, considering that the aforementioned issues – typically the most active of the agencies’ preferreds – have traded 1 million times or more per day since the Nov. 8 U.S. election.

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