Morning Commentary: Preferreds fizzle as Dow sizzles; Morgan Stanley performs well; Medley lists

By Stephanie N. Rotondo

Seattle, Jan. 25 – Preferred stocks were selling off early Wednesday as the Dow Jones industrial average finally hit the 20,000-mark.

The Wells Fargo Hybrid and Preferred Securities index was down 23 basis points at mid-morning. The U.S. iShares Preferred Stock index was meantime down 30 bps.

A trader noted the weakness, commenting that market players were “still focusing on the first 100 days” of the new president’s administration.

Morgan Stanley & Co. Inc.’s $1 billion of 5.85% series K fixed-to-floating rate noncumulative preferreds – a benchmark deal priced Tuesday – was doing quite well despite the overall negative tone.

A trader said the paper – which had freed from the syndicate – was trading “around $25.35.”

Price talk on the deal was initially at 6.125% but was soon revised to 5.875%.

Morgan Stanley & Co. LLC was the bookrunner.

The dividend will be fixed until April 15, 2027, at which point it will be based on Libor plus 349.1 bps.

But while the new issue was performing well, the 6.375% series I fixed-to-floating rate noncumulative preferreds (NYSE: MSPrI) were not, slipping a dime in early trading to $26.22.

Meanwhile, Medley LLC’s $34.5 million of 7.25% $25-par notes due 2024 began trading on the New York Stock Exchange on Wednesday.

The ticker symbol is “MDLQ.”

A trader said the baby bonds initially traded up as high as par, though they then fell below that to a $24.82 to $24.88 context.

The deal priced Jan. 13.

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