Morning Commentary: Preferreds weaker as Greece deal remains elusive; recent new issues decline

By Stephanie N. Rotondo

Phoenix, June 26 – The secondary market in preferred stock was “barely soft” early Friday, a trader said.

The Wells Fargo Hybrid and Preferred Securities Index was down 14 basis points at mid-morning.

“It should be softer,” the trader said, noting Treasury rate moves linked to the ongoing saga in Greece.

“They might get something done, whether it’s a can-kick or whatever,” he said. If that does happen, it could diminish investors’ desire to run to quality.

As of early Friday, a deal between Greece and its E.U. creditors had not been inked. There is a deadline of June 30 to get something done.

With the softness of the market, recent issues were slipping.

Wintrust Financial Corp.’s $125 million of 6.5% series D fixed-to-floating rate noncumulative perpetual preferreds – a deal from Monday – was quoted at $24.60 bid, $24.75 offered.

A trader noted that the last trade he saw was $24.65, which was down from $24.68 as of Thursday’s close.

Valley National Bancorp’s $115 million of 6.25% series A fixed-to-floating-rate noncumulative perpetual preferred stock was also retreating after popping up above par on Thursday.

That issue, which priced on June 16, was pegged at $24.90 bid, $24.97 offered. The preferreds had finished Thursday’s session at $25.04.

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