Morning Commentary: Preferreds mixed as week nears its end; Morgan Stanley holds steady

By Stephanie N. Rotondo

Seattle, Jan. 27 – Preferred stocks were on the mixed side going into Friday trading.

The Wells Fargo Hybrid and Preferred Securities index was up 4 basis points, while the U.S. iShares Preferred Stock index was down 1 bp.

A trader said Morgan Stanley & Co. Inc.’s $1 billion of 5.85% series K fixed-to-floating rate noncumulative preferreds – a benchmark deal that priced on Tuesday – was holding at $25.25 bid, $25.30 offered.

The paper has been trading in that range since pricing.

Meanwhile, Just Energy Group Inc.’s planned offering of series A fixed-to-floating rate cumulative redeemable preferred stock had not yet priced, according to a trader.

However, he did see the issue quoted at $24.55 bid, $24.62 offered in the early gray market.

The deal was first announced on Thursday. Stifel Nicolaus & Co. Inc., FBR Capital Markets and National Bank Financial Inc. are running the books.

As for the secondary, it continued to be the Fannie Mae-Freddie Mac show.

A trader said the GSE-linked preferreds were “jumping for some reason,” though he was not sure what had been driving the paper higher over the last couple of days. He noted that there was some buzz that a court case decision could be coming soon.

In early dealings, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 13 cents, or 1.46%, at $9.01.

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