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Morning Commentary: Preferreds trade mixed as liquidity lightens; Farmland issue frees to trade
By Stephanie N. Rotondo
Seattle, Aug. 11 – Trading was slowing down in the preferred stock market early Friday.
Amid the muted liquidity, the space was on the mixed side following Thursday’s sizable losses.
The Wells Fargo Hybrid and Preferred Securities index was off 18 basis points at mid-morning. The index had closed down 64 bps on Thursday.
The U.S. iShares Preferred Stock ETF was meantime up 3 bps, after ending the previous session off 90 bps.
Thursday’s weakness came as the broader markets sold off on concerns about growing tensions between the United States and North Korea. Come Friday, the equity markets were attempting to rally, as weak inflation data had some thinking that the Federal Reserve may opt to hold interest rates steady at its next meeting.
As for preferred stock dealings, Farmland Partners Inc.’s $131.25 million of 6% series B participating preferred stock – a deal priced late Thursday – freed to trade at mid-morning.
The issue was assigned a temporary ticker symbol, “FPRRP.”
Raymond James & Associates Inc. and Jefferies LLC ran the books.
The preferreds have an initial liquidation preference of $25.00 a share. That amount could be increased by an additional farmland value appreciation value (FVA), subject to certain caps, until Sept. 30, 2024.
The issue becomes redeemable after Sept. 30, 2021.
Prior to Sept. 30, 2024, no dividends will accrued or be paid on any FVA amount.
If a redemption occurs prior to Sept. 30, 2024, the redemption price will include a premium amount.
The company also has the option to convert the preferreds to common stock after Sept. 30, 2021. Holders also have a right to force a conversion upon a change of control.
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