Preferred stocks softer; Arbor Realty fizzles as add-on to 7.375% $25-par notes prices

By Stephanie N. Rotondo

Phoenix, Aug. 4 – The preferred stock market was ticking up in early Monday trading but then “mostly meandered down for most of the day,” a market source said.

The Wells Fargo Hybrid and Preferred Securities index closed down 7 basis points. It was up that much as of mid-morning.

Arbor Realty Trust Inc. announced and priced a $35 million reopening of its 7.375% $25-par senior notes due 2021 (NYSE: ABRN) on Monday. A trader said the add-on was said to have a 7.625% yield to maturity, which would place the offer price at “$24.63 or something like that.”

That compared to Friday’s close of $24.78, he noted.

“I don’t know what kind of demand they are going to get for it,” he said.

The company said that its gross proceeds from the offering would be $33.88 million, indicating a per note price of $24.20.

The notes finished the session at $24.04, down 74 cents, or 2.99%.

The notes were seeing above-average trading volume as well.

“That thing got no real traction, from what we can tell,” one source said. “Clearly the market was not responding well to it.”

The source said that the tone of the overall market might have been at least partially to blame.

“It was not a good day to do something like this,” he said.

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