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Morning Commentary: Market modestly firm in early midweek trading; Medley deal delayed
By Stephanie N. Rotondo
Seattle, Jan. 11 – The preferred stock market was mostly firm as midweek trading began.
The Wells Fargo Hybrid and Preferred Securities index was up 6 basis points at mid-morning. The iShares U.S. Preferred Stock index was flat.
A trader said Medley LLC’s planned sale of $25-par notes due 2024 that was expected to price on Wednesday was postponed to at least Thursday.
“Someone said they rushed a document through the [Securities and Exchange Commission] and there was some sort of waiting period,” the trader said. The trader also noted that once the market learned of the deal, its 6.875% $25-par notes due 2026 (NYSE: MDLX) got hammered.
Because of the weakness in the secondary piece, the trader said there was talk the company might have to make the terms of the planned deal more attractive.
On Monday, ahead of any word of the new issue, the notes ended at $24.25. At Tuesday’s close – and once the offering had become news – the paper was at $23.55.
But early Wednesday trading saw the paper edging back up 30 cents, or 1.27%, to $23.85.
In a regulatory filing late Monday, Medley registered $28.75 million of the notes, aiming for a $25 million sale of the issue with a $3.75 million greenshoe.
As previously reported, one trader speculated that the deal could grow to as much as $50 million.
FBR Capital Markets, Incapital, BB&T Capital Markets, Compass Point, Ladenburg Thalmann & Co. Inc., William Blair and JonesTrading are the joint bookrunners.
Proceeds will be used to repay a portion of outstanding amounts under a senior secured term loan facility with Credit Suisse AG, Cayman Islands Branch.
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