Morgan Stanley’s issue hits par; Invesco admitted to NYSE; volume centered on few names

By Stephanie N. Rotondo

Phoenix, Sept. 12 – The preferred stock market finished Friday’s session with a negative tone, rounding out a week that was spent mostly in decline.

The Wells Fargo Hybrid and Preferred Securities index ended off 34 basis points.

One market source said the slide was “largely driven by what was going on in the Treasury markets,” noting that Treasury bonds were “down over a point in the long end.”

Morgan Stanley & Co. Inc.’s newly priced $1 billion issue of 6.375% series I fixed-to-floating rate noncumulative preferreds hit par in early Friday trading and held there, traders reported.

A trader quoted the new deal at par bid, $25.05 offered early in the day. Another source said after the close that the preferreds were offered at $25.05.

The preferreds priced Thursday and freed to trade shortly thereafter, a trader said.

Morgan Stanley & Co. LLC ran the books.

The issue begins to float on Oct. 15, 2024 at Libor plus 370.8 basis points.

Meanwhile, Vanguard Natural Resources LLC’s $100 million of 7.75% series C cumulative redeemable perpetual preferred units – a deal that came Wednesday – was assigned a temporary reporting symbol on Friday, according to a trader.

The symbol is “VNRTP.”

The preferreds closed at $24.62, down from opening levels of $24.65.

A trader saw the issue trading around $24.70 at mid-morning.

Invesco Mortgage Capital Inc.’s $150 million of 7.75% series B fixed-to-floating rate cumulative redeemable preferreds meantime began trading on the New York Stock Exchange under the ticker symbol “IVRPB.”

Paper finished at $24.85, up from opening levels of $24.78.

The deal priced Sept. 4.

The primary market was expected to continue to be busy come next week.

“We still have a full calendar coming next week as well,” a trader said.

Ally, HSBC, Regency active

A market source said that the preferred stock market was active only in “a handful of names” on Friday.

Ally Financial Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLPA) dominated the day, with over 4.05 million shares being exchanged. The shares ended the day up 3 cents at $26.63.

“Just huge volume,” the source said. He speculated that the surge in trading volume was due to one account shifting around.

But the company was in the news on Friday, as the U.S. Treasury Department announced that it had pared down its common equity stake in the company and that a second sale of its holdings was planned.

In other busy issues, HSBC USA Inc.’s series F floating-rate noncumulative preferreds (NYSE: HUSIPF) were active and lower on the day, falling 2 cents to $21.74.

Shortly after the market closed, it was reported that the U.S. unit of the London-based bank had reached a $550 million settlement with the Federal Housing Finance Agency over accusations of misconduct in relation to securities sold to Fannie Mae and Freddie Mac ahead of the financial crisis.

Regency Centers Corp.’s 6.625% series 6 cumulative redeemable preferreds (NYSE: REGPF) were also trading in decent size on Friday, though it was not clear why.

A source noted that there was a real estate investment conference going on in New York and that it was possible that the activity was spurred by something that came out of that.

“Or it could just be somebody changing their position,” he said.

The preferreds closed down 5 cents at $25.40, but traded as low as $25.02 during the day.

On Sept. 5, the company announced a 41.406 cent-per-share dividend on the shares for Sept. 30.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.