Preferred market stays strong ahead of holiday; energy names bounce with oil; Medley lists

By Stephanie N. Rotondo

Seattle, Dec. 23 – Preferred stocks remained firm just ahead of Christmas Eve, but it was slow-going in terms of overall liquidity.

“The market was up, but it was on very light – very light – volume,” a market source said.

The Wells Fargo Hybrid and Preferred Securities index closed up 25 basis points.

Oil and gas-linked preferreds were even rebounding in Wednesday trading, following the latest domestic inventory reports.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP), for instance, were up 41 cents, or 8.7%, at $5.12. Legacy Reserves LP’s 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) were up 39 cents, or 7.41%, at $5.65.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) meantime ended at $9.06, up a dollar, or 12.41%.

Those gains came as domestic crude improved over 4% on the day, hitting $37.61 a barrel.

The strength was due to the American Petroleum Institute’s latest report – out late Tuesday – which indicated that oil inventories declined by 3.6 million barrels last week. Analysts had forecast a build of 1.1 million barrels.

Additionally, the U.S. Energy Information Administration said stockpiles fell by 5.9 million barrels last week.

Analysts polled by The Wall Street Journal had expected a gain of 600,000 barrels.

Medley hits NYSE

Medley Capital Corp.’s $70 million of 6.5% $25-par notes due Jan. 30, 2021 listed on the New York Stock Exchange on Wednesday.

The ticker symbol is “MCX.” The deal priced Dec. 15.

A trader said the notes traded as high as $24.70 but came back in to be quoted at $24.50 bid, $24.59 offered.

The issue finished the day at $24.49.

The notes came at a discounted price of $24.7325, indicating a 6.75% yield, according to a trader.

Keefe Bruyette & Woods Inc., Deutsche Bank Securities Inc., Sandler O’Neill & Partners LP and Janney Montgomery Scott LLC are the joint bookrunners. Wunderlich Securities Inc., Boenning & Scattergood Inc., KeyBanc Capital Markets Inc. and JonesTrading Institutional Services LLC are co-managers.

Interest will be payable quarterly. The notes become redeemable on or after Jan. 30, 2019.

Holders can also require the company to redeem the issue upon a change of control.

Proceeds will be used to redeem $40 million of unsecured notes due March 30, 2019, to repay a portion of debt under a revolving credit facility, to fund new investment opportunities and for general corporate purposes.

Medley Capital is a New York-based business development company.

CHS busy, better

CHS Inc.’s paper was the most active among paying securities, a market source said Wednesday.

The 6.75% series 3 class B reset rate cumulative redeemable preferreds (Nasdaq: CHSCM) closed up at quarter at $26.72, while the 7.1% series 2 class B reset rate cumulative redeemable preferreds (Nasdaq: CHSCN) held steady at $27.08.

There was no fresh news out on the agricultural cooperative to explain the movements.

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