Preferreds soften as hurricane damage eyed; week’s new issues buck day’s downward trend

By Stephanie N. Rotondo

Seattle, Sept. 8 – The preferred stock market waned along with the broader markets on Friday as investors worried about the overall economic cost of hurricanes Harvey and Irma.

The Wells Fargo Hybrid and Preferred Securities index dropped 24 basis points. The U.S. iShares Preferred Stock ETF declined 21 bps.

Despite the weaker tone of the day, deals priced during the week were faring rather well.

Global Net Lease Inc.’s $100 million of 7.25% series A cumulative redeemable preferred stock was pegged at $24.60 bid, $24.70 offered by one trader.

Another market source saw the issue closing at $24.62, though he noted that the volume weighted average price of $24.697 was “a bit better.”

BMO Capital Markets Corp. and Stifel Nicolaus & Co. Inc. ran the books on the deal, which priced ahead of Thursday’s open.

Initial price talk was 6.875%.

TCF Financial Corp.’s $175 million of 5.7% series C noncumulative preferreds were meantime seen at $25.05 at the bell, with about 1.11 million shares trading.

The preferreds were quoted at par bid, $25.05 offered earlier in the day.

That deal also came Thursday, via Morgan Stanley & Co. LLC and UBS Securities LLC. The issue freed to trade around lunchtime.

The temporary ticker is “TCFFP.”

And, Pennsylvania Real Estate Investment Trust’s $120 million of 6.875% series D cumulative redeemable perpetual preferred stock – a deal that came late Thursday – inched up a penny to close at $24.65.

The preferreds were offered at $24.60 at mid-morning, according to a trader.

The issue was the day’s top trader, with about 1.49 million shares being exchanged. It also freed to trade later in the day, getting a temporary symbol of “PEIDP.”

Wells Fargo Securities LLC, Citigroup Global Markets Inc., Jefferies LLC, J.P. Morgan Securities LLC and Stifel Nicolaus ran the books.

Among deals priced earlier in the week, the Carlyle Group’s $400 million of 5.875% series A perpetual preferred units were up 2 cents at $25.02.

The deal came Wednesday tighter than the 6% price talk. The issue then freed to trade around midday on Thursday. Its temporary ticker symbol is “CGGGP.”

Morgan Stanley, BofA Merrill Lynch, UBS Securities, Wells Fargo and JPMorgan led the deal.

Meanwhile, Alabama Power Co.’s $250 million of 5% class A cumulative preferred stock was higher at the open, but drifted down by mid-morning. By the bell, the issue had firmed back up, adding a nickel to finish at $25.40.

The deal came Tuesday prior to the market’s close. It soon freed, trading under the temporary ticker “ABBLP.”

Initial price talk was 5.125%.

BofA Merrill Lynch, JPMorgan, Morgan Stanley and Wells Fargo were the joint bookrunners.

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