Morning Commentary: Preferreds firm; recent deals boosted; Atlas Pipeline units drift lower

By Stephanie N. Rotondo

Phoenix, Jan. 28 – There was more strength seen in the preferred stock market Wednesday, despite growing concerns about a strengthening dollar.

The Wells Fargo Hybrid and Preferred Securities index was up 9 basis points at mid-morning.

“People are worried now with the dollar gaining strength that it will effect larger cap companies with foreign growth,” a trader said. However, he said it was possible that low oil prices could combat that.

In early trading, the positive tone of the market was certainly benefitting recently priced deals.

Bank of America Corp.’s $1 billion of 6.5% series Y noncumulative preferreds hit the New York Stock Exchange on Wednesday, as was expected.

“It’s moving up nicely,” a trader said, seeing the paper in a $25.05 to $25.06 context.

Over half a million shares had already traded at mid-morning.

The deal priced Jan. 20. The ticker symbol is “BACPY.”

CorEnergy Infrastructure Trust Inc.’s $50 million of 7.375% series A cumulative redeemable preferreds were meantime pegged at $25.02.

The deal came Jan. 22.

“I’m not sure when it’s listing,” a trader said.

And, CHS Inc.’s $450 million of 7.5% class B series 4 cumulative redeemable preferreds (Nasdaq: CHSCL) hit $26.00.

The issue came upsized from $250 million on Jan. 13 and quickly moved up to levels north of par.

Away from recent deals, Atlas Pipeline Partners LP’s 8.25% class E cumulative redeemable perpetual preferred units (NYSE: APLPE) were weakening, just one day after the company said it was redeeming all 5.06 million outstanding units.

The units were off 37 cents, or 1.45%, at $25.15 early in the session.

Though the preferred units are technically not callable until 2019, the company is merging with a wholly owned subsidiary of Targa Resources Partners LP and is thus triggering its change-of-control feature.

The redemption – at par plus accrued dividends – will take place Feb. 28, the same day the merger is expected to close.

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