Morning Commentary: Preferreds rise with Treasuries; KeyCorp better; DTE Energy treads water

By Stephanie N. Rotondo

Seattle, Dec. 7 – The preferred stock market was firming up early Wednesday, though it was “not a rip-your-face-off rally, by any means,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index was up 23 basis points at mid-morning.

The trader attributed the rise in preferreds to gains in the bond market. Treasuries were experiencing “a bit of a dead-cat bounce on the likelihood that the European Union will continue” its quantitative easing program.

“There is still enough weakness in the global market that QE is still out there,” the trader commented.

In early dealings, KeyCorp’s $500 million of 6.125% series E fixed-to-floating rate noncumulative preferreds – a deal priced Monday and freed on Tuesday – were “moving up nicely,” according to one trader.

The trader said the paper was trading “right around” $25.35.

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 holding in a $24.30 to $24.35 range, a trader said.

The issue – which came Nov. 28 – is scheduled to list on the New York Stock Exchange on Thursday under the ticker symbol “DTY.”

In secondary trading, a trader noted that Fannie Mae and Freddie Mac preferreds were “inching up again, but on light volume.”

The GSE-linked paper has been trending mostly higher since the Nov. 8 election but has seen pockets of softness this week.

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