Morning Commentary: Preferred market little moved as broader markets drift down; new deals trade

By Stephanie N. Rotondo

Seattle, Sept. 23 – The preferred stock market was holding its ground on Friday as the rest of the market was coming in.

Markets had run up earlier in the week, first on expectations the Federal Reserve would hold interest rates steady and then when that expectations proved true.

But while the preferred space was unchanged to marginally higher, a trader noted that volume was starting to dwindle.

As for the week’s new issues, Arch Capital Group Ltd.’s $450 million of 5.25% series E noncumulative preferreds – a deal priced Thursday – had not yet freed as of mid-morning, according to a trader.

He saw the issue quoted at $24.87 bid, $24.90 offered.

The deal came via BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, J.P. Morgan Securities LLC and RBC Capital Markets. It was upsized from $250 million and at the tight end of the 5.25% to 5.375% price talk.

Meanwhile, AmTrust Financial Services Inc.’s $287.5 million of 6.95% series F noncumulative preferreds were pegged at par bid, $25.12 offered.

That issue priced Tuesday, with $250 million of the preferreds being sold. On Thursday, the deal’s $37.5 million greenshoe was fully exercised, a market source reported.

From Monday’s business, Gladstone Investment Corp.’s $50 million of 6.25% series D cumulative term preferred stock was seen at $25.13 bid, with no offers. That was down from $25.19 as of Thursday’s close.

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