NuStar’s new units free to trade, trend higher; Fannie, Freddie mixed; Citigroup declines

By Stephanie N. Rotondo

Seattle, Nov. 18 – The preferred stock market was trending upward in early Friday trading but followed the equity markets lower by day’s end.

The Wells Fargo Hybrid and Preferred Securities index ended down 77 basis points, after being up 10 bps at mid-morning.

NuStar Energy LP’s $200 million of 8.5% series A fixed-to-floating rate cumulative redeemable perpetual preferred units were gaining ground, after trading weakly post-pricing on Thursday.

The issue freed to trade in the afternoon. After freeing, the preferreds traded up to $24.87, which one market source said was “toward the high end of the range” they were trading at all day.

One market source pegged the units at $24.80 bid, $24.86 offered in the early gray market, which compared to $24.68 bid, $24.78 offered on Thursday.

At another desk, the units were seen at $24.80 bid, $24.82 offered.

A trader opined that Thursday’s weakness was because “somebody dumped it on the way out.” But he speculated that Friday’s higher levels could also be due to “the manager cleaning it up.”

The deal came Thursday, upsized from $100 million and in line with price talk. The units begin to float on Dec. 15, 2021 at Libor plus 676.6 bps.

Wells Fargo Securities LLC, BofA Merrill Lynch and UBS Securities LLC ran the books.

A trader said he was also hearing talk of another new deal for next week, though he did not have any specifics.

Meanwhile, Fannie Mae and Freddie Mac preferreds were mixed in early dealings and stayed that way through the close.

Fannie’s 8.25% series S noncumulative preferreds (OTCBB: FNMAS) were off a nickel at $5.88 at mid-morning and later finishing off 37 cents, or 6.24%, at $5.56. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were initially up 4 cents at $5.64 but retreated 22 cents, or 3.93%, to $5.38.

Citigroup Inc.’s paper was lower for the session.

The 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPN) added 4 cents in early dealings, trading up to $25.99. The securities followed the market downward, eventually losing 7 cents to close at $25.88.

The 5.8% series C noncumulative preferreds (NYSE: CPC) were off 8 cents at $24.46 in early trading and ended the day down even more, losing 39 cents, or 1.59%, to $24.15.

The 6.3% series S noncumulative preferreds (NYSE: CPS) declined 32 cents, or 1.26%, to $25.09.

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