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Midday Commentary: Trader says Fed news could be good for preferreds; TCF new issue on tap
By Stephanie N. Rotondo
Phoenix, Dec. 12 - A preferred stock trader said market players were focusing on the Federal Reserve announcement Wednesday morning.
The Fed said that it intended to keep interest rates low until unemployment had declined to around 6% to 6.5%, the trader said. He noted that such actions could be good for the preferred market, especially if more clarity is given on the fiscal cliff dealings.
"We could see a lot more companies come out and issue more debt," he said.
Additionally, he said that the remainder of 2012 might see a few more new issues, though he expected they would be smaller deals, such as the proposed offering that TCF Financial Corp. reported Wednesday.
The Wayzata, Minn.-based company said it planned to sell at least $75 million of series B noncumulative perpetual preferred stock. Price talk is around 6.5%.
"It's doing well," the trader said, seeing paper trading around $24.85 in the midday gray market.
Meanwhile, Retail Properties of America Inc.'s new $125 million issue of 7% series A cumulative redeemable perpetual preferreds were quoted at $24.90 bid, $24.92 offered.
The deal priced late Tuesday.
Also, recent deals from Prudential Financial Corp. and Solar Capital Ltd. listed on the New York Stock Exchange ahead of the trading session.
Prudential's $500 million of 5.75% $25-par junior subordinated notes due 2052 priced Nov. 28 and were admitted to the NYSE on Wednesday under the symbol "PJH."
The notes were at $25.11 at midafternoon, versus opening levels of $25.20.
And, Solar Capital's $100 million of 6.75% $25-par senior notes due 2042 listed under the ticker "SLRA."
That issue came Nov. 8. The notes were at $23.15 at midday, compared to an opening price of $23.90.
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