Morning Commentary: Banks, oil and gas preferreds improve slightly; Bluerock, Targa get little love

By Christine Van Dusen

Atlanta, Oct. 22 – Preferred stocks, particularly from oil and natural gas companies, were marginally better on an otherwise mostly quiet and flat Thursday morning for the market.

Recent issues saw little action, with Bluerock Residential Growth REIT Inc.'s new preferreds – $62.5 million 8.25% series A cumulative redeemable perpetuals that priced last week at $25.00 per share – trading at $25.30 on just 600 shares traded, a trader said.

On Wednesday the preferreds were quoted between $25.10 and $25.30.

Wunderlich Securities Inc. and Compass Point were the joint bookrunning managers. DA Davidson & Co. and Janney Montgomery Scott LLC were co-lead managers.

Houston-based Targa Resources Partners LP's 9% fixed-to-floating rate cumulative redeemable preferred units – now listed as "NGLS.PA" – traded Thursday morning at $24.77, down 14 cents on 14,440 shares traded.

An additional $15 million of the units were sold last week via Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC. Added to the $110 million initially sold on Oct. 7, total issuance comes to $125 million.

The over-allotment option allowed for up to $16.5 million additional units to be sold.

Preferreds from Fannie Mae and Freddie Mac didn't move much on Thursday morning, following the recent news that the White House had declined to release the mortgage companies from government control.

“They took a little dinger yesterday, but overall today there’s a lack of volume, and everything’s pretty flat,” a trader said.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) opened Thursday at $4.80 after closing Wednesday at $4.81.

The 8.25% series T noncumulative preferreds (OTCBB: FNMAT) started off Thursday at $6.93 after finishing Wednesday at $6.96.

Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were seen Thursday morning at $4.81 after ending Wednesday’s session at $4.85.

Banks, meanwhile, “firmed up a hair,” the trader said. “But there’s nothing I saw in any earnings reports that indicates they'd be raising new capital or calling in some of the older preferreds.”

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