Preferreds gain with broader markets; Wells Fargo, American Homes to list; Capital One up

By Stephanie N. Rotondo

Seattle, April 24 – Preferred stocks opened the new trading week in mixed fashion but eventually finished firm, following along with the broader markets.

The across-the-board gains were largely attributed to the results of the French election, which ended with candidates Emmanuel Macron and Marine Le Pen slated for the upcoming run-off.

Emmanuel, a left-centrist and political novice, is leading the polls over the far-right National Front party leader.

The Wells Fargo Hybrid and Preferred Securities index closed up 6 basis points, after being off 2 bps at mid-morning. The U.S. iShares Preferred Stock ETF was up 10 bps.

The ETF is linked to the S&P U.S. Preferred Stock index, which rebalanced after Friday’s close.

No new issues were seen in Monday’s session, but a trader did say that he was hearing of an offering slated for Tuesday from an unspecified master limited partnership.

As for the previous week’s deals, they continued to be in focus.

Wells Fargo & Co.’s $600 million of 5.625% series Y class A noncumulative preferreds were pegged at $25.07 bid, $25.10 offered early in the day and closed at $25.07. That was a loss of 3 cents on the day.

A market source said the paper is expected to hit the New York Stock Exchange on Tuesday under the ticker symbol “WFCPrY.”

The deal priced April 17, coming upsized from $250 million and tight to the 5.875% price talk.

The issue has a temporary symbol, “WFGGP.”

Also slated to list this week are American Homes 4 Rent’s $150 million of 5.875% series F cumulative redeemable preferreds from a deal that priced April 19.

The issue is scheduled to be admitted to the NYSE on Wednesday under the symbol “AMHPrF.”

Ahead of the listing, the paper was trading at $24.70, down 2 cents. In earlier trading, the preferreds were at $24.75, up 3 cents.

Like Wells Fargo, American Homes also has a temporary ticker, “AMHTP.”

Qwest Corp.’s $575 million of 6.75% $25-par notes due 2057 – a deal from April 18 – had not yet been assigned a temporary ticker, according to a market source, nor was there any word of a pending listing.

The notes finished the day at par, though a market source opined that a volume weighted average price of $24.82 was more accurate.

The notes were seen at $24.80 bid, $24.85 offered in early trading.

CapOne earnings on deck

Capital One Financial Corp.’s 5.2% series G noncumulative preferreds (NYSE: COFPrG) were gaining ground ahead of the company’s earnings release on Tuesday.

The preferreds closed at $23.76, up 6 cents.

The financial services firm is expected to post earnings per share of $1.94, according to a poll conducted by Zacks Investment Research.

Speculation and GSEs

Fannie Mae and Freddie Mac were again active on Monday, though it was only “more speculation” on potential housing reform that caused the flurry and not actual news, a market source said.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) ended the day a penny lower at $6.96, with about 2.96 million shares changing hands.

However, the issue did trade positive for most of the day.

Fannie’s 8.25% series T noncumulative preferreds (OTCBB: FNMAT) meantime slipped 3.5 cents to $6.975.

As for Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ), they ended off 4 cents at $6.40.

While there was no fresh news to act as a catalyst, the source did point out that “it is possible that the White House comes out with a Dodd-Frank corrections proposal this week.

“It’s not likely that this creates the overhaul of the mortgage industry, but there might be some mild side impact on the GSEs,” the source said. “Although, I highly doubt it would be anything major.”

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