Preferred Stock Midday Commentary: Market shakes off Spain downgrade; American Financial plans deal

By Stephanie N. Rotondo

Phoenix, June 7 - Preferred stocks were holding their own in Thursday trading, even as Fitch Ratings dropped Spain's issuer default rating to BBB from A.

"The market doesn't really care," a trader said at midday. "Ratings don't really mean much."

The new issue market continued to trickle out deals, as American Financial Group Inc. announced plans to sell $25-par senior notes.

Price talk is 6.375% to 6.5%, according to a trader, and at least 6 million notes (Baa2/BBB+) will be issued.

"It's a smaller deal, but they could possibly grow it," the trader said. "I imagine it'll be at the tighter end."

The trader commented that the deal was "doing pretty well" in the gray market, seeing paper trade at $24.65.

Meanwhile, Public Storage's newly-priced 5.625% series U cumulative perpetual preferreds freed to trade, according to a trader.

The $250 million issue - which priced Wednesday - was moving up, trading at $24.77 bid, $24.80 offered in the gray.

The trader also noted that the calendar is expected to be "full," especially once Greece has its vote on June 17.

"It sounds like it'll be a very full market of new issues coming," he said.

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