Preferreds trade off with broader markets; CoBank, State Street stay strong; crude declines weigh

By Stephanie N. Rotondo

Seattle, April 7 – The preferred stock market turned south Thursday, as global economic concerns pressured the broader markets.

The Wells Fargo Hybrid and Preferred Securities Index fell 31 basis points by the closing bell. The index was off 16 bps at mid-morning.

But while the preferred space was heading lower, recently priced deals were holding their ground.

A trader said CoBank ACB’s $375 million of 6.25% $1,000-par fixed-to-floating rate perpetual preferreds – a deal from late Tuesday – was “still” trading around 100.875 early in the day.

The issue eventually pushed even higher, trading around “101.25-ish.”

JPMorgan Securities LLC and Morgan Stanley & Co. LLC ran the books.

The dividend is fixed until Oct. 1, 2026, at which point it will begin floating at Libor plus 466 bps.

The Denver-based national cooperative bank will use proceeds to increase regulatory capital, pursuant to Farm Credit Administration regulations. Funds could also be used for general corporate purposes.

Meanwhile, State Street Corp.’s $500 million of 5.35% series G fixed-to-floating rate noncumulative preferreds were “still bid strong” at $25.60 at mid-morning, with offers seen at $25.70. However, a trader noted that “very little is offered out there.”

The preferreds closed the day at $25.67, up 2 cents.

Morgan Stanley, UBS Securities LLC, BofA Merrill Lynch and Wells Fargo Securities LLC led that deal, which came to market on Monday. The deal has a temporary symbol, “SSTTP.”

As for recently listed issues, Torchmark Corp.’s $300 million of 6.125% $25-par junior subordinated debentures due June 15, 2056 (NYSE: TMKPC) were initially seen in Thursday’s session ticking up 3 cents to $25.13. But the paper reversed course by day’s end, closing off 3 cents at $25.07.

The deal priced March 29, coming upsized from $150 million.

Oil names lose big

After being among the day’s biggest percentage gainers on Wednesday, oil and gas names listed among the day’s worst percentage performers on Thursday.

The downward move came as oil prices ticked down less than 1% – losses were greater earlier in the day – to $37.46. The decline in domestic crude was attributed to new data from Genscape, which showed a nearly 256,000-barrel build of stocks at the Cushing delivery point – even though TransCanada had shut its 590,000-barrel per day Keystone pipeline since Saturday.

Legacy Reserves LP’s 8% series A fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYP) dropped 14 cents, or 5.51%, to $2.40. That issue had fallen nearly 10% in midweek trading.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were seen losing 22 cents, or 3.78%, to close at $5.60. The units had improved almost 4% the previous day.

And Vanguard Natural Resources LLC’s 7.875% series A cumulative redeemable preferred units (Nasdaq: VNRAP) declined a dime, or 2.68%, to $3.63.

Of the three issues, Breitburn is the only one still paying distributions.

© 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.