Morning Commentary: Ashford plans new cumulative deal; trader hears Medley add-on coming discounted

By Stephanie N. Rotondo

Seattle, Oct. 13 – The preferred stock market remained weak on Thursday, following the broader markets downward.

The Wells Fargo Hybrid and Preferred Securities index was down 29 basis points at mid-morning.

Despite the softer tone, Ashford Hospitality Trust Inc. added a deal to the new issue calendar, a $100 million offering of series G cumulative preferreds.

Price talk is 7.375%, a market source said.

A trader said there was a “standing bid” of $24.68 in the early gray market, though he noted that there were not yet any offers.

Morgan Stanley & Co. LLC and UBS Securities LLC are running the books.

Medley LLC also brought a deal, of sorts. The New York-based asset management firm said it planned to sell $25 million more of its 6.875% $25-par unsecured notes due 2026.

“It’s weird the way they are doing it,” a trader said, hearing the company planned to issue the add-on at $24.60 apiece.

The trader said he thought it was “ridiculous” for the company to bring a discounted deal, just two months after the original issuance.

Medley originally priced $25 million of the notes on Aug. 4.

“It’s a silly, short-sighted move,” he said.

The notes (NYSE: MDLX) were trading at $24.54 at mid-morning, down 24 cents.

Incapital LLC, FBR Capital Markets, JonesTrading, William Blair & Co. and Ladenburg Thalmann & Co. Inc. are the joint bookrunners.

As for recently priced deals, National Retail Properties Inc.’s $345 million of 5.2% series F cumulative redeemable preferred stock listed on the New York Stock Exchange on Thursday under the ticker “NNNPF.”

The paper was trading at $24.71 at mid-morning versus $24.70 at the open.

The deal priced Oct. 4.

Eagle Point Credit Co. Inc.’s $30 million of 7.75% series B term preferred stock due 2026 also hit the NYSE on Thursday under the symbol “ECCB.”

That issue – which priced Oct. 5 – was at $25.45 at mid-morning, up from $25.30 at the open.

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