KeyCorp’s new deal active, bucks downward trend; DTE lists on NYSE; GSE paper weakens

By Stephanie N. Rotondo

Seattle, Dec. 8 – KeyCorp’s $500 million of 6.125% series E fixed-to-floating rate noncumulative preferreds were busy – and better – on Thursday.

The paper ended at $25.35, up 19 cents.

A trader saw the issue at $25.25 bid, $25.32 offered at mid-morning, which was down a touch from the previous close.

However, there was a high print with a $27-handle in early dealings.

The deal came Monday, upsized from $250 million and tight to the 6.25% area price talk. The issue freed from the syndicate on Tuesday and is trading under a temporary symbol, “KYYPP.”

DTE Energy Co.’s $280 million of 6% $25-par 2016 series F junior subordinated debentures due 2076 meantime listed on the New York Stock Exchange, as was expected.

The ticker symbol is “DTY.”

A trader said the paper was “moving on up,” placing the debentures in a $24.51 to $24.65 context.

The issue finished at $24.60, up from $24.24 at the open.

Looking ahead, a trader said that there would be “maybe two [new] deals for the rest of the year and that’s about it.”

As for the secondary, the market was losing some of the ground gained in the last two sessions.

The Wells Fargo Hybrid and Preferred Securities index traded down 22 basis points.

Still, a market source remarked that the preferred space did “way better than Treasuries, so all things considered, not too bad.”

Treasuries fell after the European Central Bank said it would taper its bond repurchase program in 2017, though it would continue the program through the end of the year.

Fannie, Freddie drift down

Given the overall weakness of the day, Fannie Mae and Freddie Mac preferreds remained on the active side but drifted down in sympathy.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) waned 11 cents, or 1.28%, to $8.49. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) declined 20 cents, or 2.47%, to $7.90.

Notably, less than 1 million of the GSE-linked preferreds traded apiece. Since the Nov. 8 U.S. election, the mortgage guarantors’ preferreds have dominated overall trading, pushing mostly higher on hopes the incoming administration would take action on housing reform in a way that was beneficial to stockholders. Steven Mnuchin, the supposed pick for Treasury Secretary, added to the so-called “Trump Rally” when he said that housing reform was a priority and that the GSEs need to get out from under governmental control.

But in the wake of Mnuchin’s comments, market commentators began to question just how the president-elect intended to deal with the agencies, given the complexity of the situation.

Adding to the complexity is the fact that most Congressional Republicans – and even some Democrats – have expressed a desire to wind-down the GSEs, not recapitalize them.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.