Preferreds rebound intraday, still end soft; Arbor Realty Trust, Kemper price new deals

By Stephanie N. Rotondo

Phoenix, Feb. 20 - The preferred stock market was slipping Thursday as new manufacturing data improved more than expected and unemployment numbers fell.

A trader opined that the market has had "such a run up" that investors "could just be taking a breather."

The Wells Fargo Hybrid and Preferred Securities index was down 15 basis points as of midday. It came back a bit, however, ending down just 8 bps.

"The market was pretty active overall," a market source said.

The primary saw two new deals added to the calendar, though they were small issues.

Arbor Realty Trust Inc. said it was planning to sell series C cumulative redeemable preferred stock. Price talk was 8.375% to 8.5%.

The company was expected to sell at least $20 million of the shares via Deutsche Bank Securities Inc., JMP Securities, Ladenburg Thalmann & Co. Inc. and MLV & Co. LLC. When the deal came after the close, it was at $22.5 million.

The preferreds were priced at par to yield 8.5%.

Early in the session, a trader said he hadn't seen any gray market for the issue. After the close, another market source said he wasn't focused on the new issue at all, instead fixing his gaze on Kemper Corp.

Kemper announced an offering of at least $100 million $25-par subordinated debentures due 2054 early in the day. Price talk was 7.375% to 7.5%.

A trader said he saw gray-market bids for the notes at $24.75, "maybe higher," as of midday.

The issue continued to shine throughout the day, rising to $24.92 bid, $25.02 offered in the gray market shortly before 3 p.m. ET.

Just before the market closed, the deal priced, coming upsized at $150 million and at the tight end of talk.

When asked if investors were clamoring for the paper because it was an insurance company, a trader said it was "that and it's a good yield and a small deal."

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

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