Morning Commentary: Preferreds decline; American Financial bringing new issue; Goodrich firms

By Stephanie N. Rotondo

Seattle, Nov. 9 – The preferred stock market was under pressure in early Monday trading, following Friday’s sell-off spurred by a new jobs report that led many to think an interest rate increase was imminent.

The Wells Fargo Hybrid and Preferred Securities index was off 47 basis points at mid-morning.

Despite the weakness in the market, a new deal was added to the primary calendar.

American Financial Group Inc. said it would sell $25-par subordinated debentures due 2055 on Monday.

Price talk is 6% to 6.125%, according to a market source.

A trader saw a $24.75 bid in the gray market for paper.

The trader added that there is “no selling group.”

BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC are the bookrunners.

On the news, the company’s 6.25% $25-par subordinated debentures due 2054 (NYSE: AFGE) were trading down 65 cents, or 2.45% at $25.90.

In the secondary space, Goodrich Petroleum Corp.’s preferred shares were gaining ground in response to word of an exchange offer.

The company announced the swap – 10% series E cumulative convertible preferred stock for all outstanding 5.375% series B cumulative convertible preferreds and up to 2.39 million shares each of the 10% series C cumulative preferreds and 9.75% series D cumulative preferreds – late Friday.

The Cs (NYSE: GDPPC) were up 92 cents, or 38.86%, at $3.29, while the Ds (NYSE: GDPPD) were 62 cents, or 26.25%, higher at $3.02.

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