Preferreds mixed ahead of Yellen speech, finish higher; PennyMac lackluster post-pricing

By Stephanie N. Rotondo

Seattle, March 3 – The preferred stock market was mixed going into Friday trading but ended with a firmer tone following comments made by Janet Yellen, Federal Reserve chairman.

The Wells Fargo Hybrid and Preferred Securities index closed up 4 basis points. The index was down 7 bps at mid-morning. The U.S. iShares Preferred Stock index traded up 10 bps.

In a speech given in Chicago, Yellen said that benchmark interest rates will likely go up this month, barring any economic surprises.

Furthermore, she indicated that as many as three rate increases could come this year.

Late Thursday, PennyMac Mortgage Investment Trust priced $115 million of 8.125% series A fixed-to-floating rate cumulative redeemable preferreds.

The deal came in line with the 8.125% price talk and was upsized from $75 million.

The new issue was not faring all that well in Friday dealings, however.

A trader pegged the paper at $24.50 bid, $24.55 offered, adding that it had not yet freed to trade as of mid-morning.

Toward the end of business, another source said that the deal had yet to free.

Morgan Stanley & Co. LLC, Keefe Bruyette & Woods Inc. and RBC Capital Markets ran the books.

The dividend will be fixed through March 15, 2024, at which point it will begin floating at Libor plus 583.1 bps.

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