Morning Commentary: NGL Energy taps $25-par market; Duke Energy gains; AllianzGI lower

By James McCandless

San Antonio, March 27 – The preferred market opened Wednesday slightly higher as the Wells Fargo Hybrid & Preferred Securities Financial index started up by 0.08%.

NGL Energy Partners LP priced a downsized $40 million offering of $25-par class C fixed-to-floating rate cumulative redeemable perpetual preferred units with an initial dividend of 9.625%.

There is a $6 million greenshoe.

The deal, announced on Tuesday, was downsized from an initial $50 million and matched talk for a dividend in the 9.625% area.

RBC Capital Markets, LLC, Morgan Stanley & Co. LLC and UBS Securities LLC are the joint bookrunners.

The preferreds are redeemable on or after April 15, 2024 at par. Prior to that, they are redeemable within 120 days after a change-of-control event.

The dividend is fixed until April 15, 2024, then converts to Libor plus 738.4 basis points.

Elsewhere, leading early trading, electric utility Duke Energy Corp.’s new 5.75% series A cumulative redeemable perpetual preferred stock started the session with a move upward.

The preferreds, trading under the temporary symbol “DUEKL,” gained 6 cents to $25.45 on volume of about 381,000 shares.

Closed-end fixed income mutual fund AllianzGI Convertible & Income Fund II’s 5.5% series A cumulative preferreds were trailing early.

The preferreds (NYSE: NCZPrA) fell 8 cents to $24.05 with about 118,000 shares trading.

Meanwhile, real estate investment trust AGNC Investment Corp.’s 6.875% series D fixed-to-floating rate cumulative redeemable preferreds were slightly better.

The preferreds (Nasdaq: AGNCM) gained 2 cents to $25.05 with about 80,000 shares trading.

Sector peer Public Storage’s 5.6% series H cumulative preferred shares followed the positive trend.

The preferreds (NYSE: PSAPrH) were up 5 cents to $25.60 with about 70,000 shares trading.

In finance, U.S. Bancorp’s 6.5% series F non-cumulative perpetual preferred stock was positive at Wednesday’s open.

The preferreds (NYSE: USBPrM) picked up 7 cents to $27.20 on volume of about 70,000 shares.

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