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Preferreds aim for higher ground in first trading day of the month; recent deals dip
By Stephanie N. Rotondo
Seattle, Sept. 1 – The first trading day of the month had a firm tone for the preferred stock market, though down from the day’s highs.
The Wells Fargo Hybrid and Preferred Securities index closed 2 basis points better after being up 4 bps at mid-morning.
Still, traders lamented that liquidity continued to be constrained.
“It’s going to be a very slow two days” ahead of the Labor Day holiday weekend, a trader opined. “These last two weeks have been just crazy slow.”
The upside, however, is that September’s new issue calendar is expected to be active, which should result in some activity, the trader added.
As for the day’s dealings, the trader did appear to be correct: Trading was very slow, with even recently priced issues – which have made up the bulk of the activity of late – moving much less than they have all week.
Qwest Corp.’s $977.5 million of 6.5% $25-par notes due 2026 (NYSE: CTBB) – consisting of $850 million sold on Aug. 11 and a fully exercised greenshoe of $127.5 million – retreated from Wednesday’s highs, slipping 3 cents to $25.97. Legg Mason Global Asset Management’s $500 million of 5.45% $25-par junior subordinated notes due Sept. 15, 2056 (NYSE: LMHB) – priced Aug. 3 – were off 9 cents at $25.07.
Away from newer issues, Freddie Mac’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were busy in mid-morning trading, but less so as the day wore on. The paper was bucking the day’s upward trend, however, falling 21 cents, or 5.51%, to $3.60.
Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) saw its volume increase sizably by the end of the day, and the issue ended up the most active security of the session. Like Freddie, the preferreds were weaker, closing down 16 cents, or 4.03%, to $3.81.
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