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Morning Commentary: NuStar’s units not yet free, but trading better; Fannie, Freddie mixed
By Stephanie N. Rotondo
Seattle, Nov. 18 – The preferred stock market was trending up in early Friday trading, though there was a bit of a mixed tone in the day’s most active issues.
The Wells Fargo Hybrid and Preferred Securities index was up 10 basis points at mid-morning.
NuStar Energy LP’s $200 million of 8.5% series A fixed-to-floating rate cumulative redeemable perpetual preferred units were gaining ground, after trading weakly post-pricing on Thursday.
One market source pegged the units at $24.80 bid, $24.86 offered in the gray market, which compared to $24.68 bid, $24.78 offered on Thursday.
At another desk, the units were seen at $24.80 bid, $24.82 offered.
A trader opined that Thursday’s weakness was because “somebody dumped it on the way out.” But he speculated that Friday’s higher levels could also be due to “the manager cleaning it up.”
The deal came Thursday, upsized from $100 million and in line with price talk. The units begin to float on Dec. 15, 2021 at Libor plus 676.6 bps.
Wells Fargo Securities LLC, BofA Merrill Lynch and UBS Securities LLC ran the books.
A trader said he was also hearing talk of another new deal for next week, though he did not have any specifics.
Meanwhile, Fannie Mae and Freddie Mac preferreds were mixed in early dealings.
Fannie’s 8.25% series S noncumulative preferreds (OTCBB: FNMAS) were off a nickel at $5.88, while Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were up 4 cents at $5.64.
Citigroup Inc.’s paper was also mixed at mid-morning.
The 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPN) added 4 cents in early dealings, trading up to $25.99. But the 5.8% series C noncumulative preferreds (NYSE: CPC) were off 8 cents at $24.46.
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