Market little fazed by government shutdown; Morgan Stanley better; Allstate gives up gains

By Stephanie N. Rotondo

Phoenix, Oct. 1 - A partial shutdown of the federal government was having little effect on the preferred stock market on Tuesday.

One trader said there was some weakness in the market, but not too much.

"There's no rush to the exits, by any means," he said.

In fact, as of midday, the Wells Fargo Hybrid and Preferred Securities index was trading up 12 basis points. That being said, by the end of business the index had turned red, falling 13 bps.

However, the primary market was getting a bit of a pinch, as new deal flow - and even chatter of upcoming deals - was nil.

Morgan Stanley & Co. Inc.'s $750 million of 7.125% series E fixed-to-floating rate noncumulative preferreds were again the dominating security of the day and were even trading up on the day, with a trader pegging the issue at $25.25 bid, $25.28 offered at midday.

At the close, a market source called the issue up 13 cents at $25.33.

The source noted that over 1.44 million shares changed hands.

The Allstate Corp.'s $350 million of 6.75% series C fixed-rate noncumulative perpetual preferreds were meantime seen offered at $24.95 around lunchtime, though they had traded above par earlier in the session, according to a trader.

The paper finished the day down 20 cents at $24.85, according to another source.

Morgan Stanley priced Sept. 24, and Allstate came Sept. 23.

Among other recent deals, a trader said Tsakos Energy Navigation Ltd.'s $50 million of 8.875% series C cumulative redeemable perpetual preferred shares finally freed to trade after pricing on Sept. 26. He said he had seen a $24.57 offer for paper, though he added that not many markets were coming through.

And, Miller Energy Resources Inc.'s $25 million of 10.5% series D fixed-to-floating rate cumulative redeemable perpetual preferred stock - a deal that came Sept. 25 - listed on the New York Stock Exchange on Tuesday under the ticker symbol "MILLPD."

That issue was trading at $24.43 as of midday, down from $24.80 at the open. As of the bell, the preferreds were trading at $24.39.

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