Morning Commentary: Preferreds slightly better as week begins; FOMC meeting, rate decision eyed

By Stephanie N. Rotondo

Seattle, March 13 – The preferred stock market had a firm feel in early Monday trading, though a trader commented that dealings were muted.

“It will probably be quiet this week,” the trader said, pointing not only to the Federal Reserve’s upcoming policy meeting, but also to expected snow in the Northeast.

“This whole week is going to be wait and see,” he said.

The Wells Fargo Hybrid and Preferred Securities Index was up 2 basis points at mid-morning. The U.S. iShares Preferred Stock Index was up 7 bps.

The Fed’s Federal Open Market Committee is slated to meet this week, with an announcement expected on Wednesday regarding whether or not interest rates will be raised.

It is widely expected that rates will increase by 25 basis points. However, the market will be looking for clues as to how many increases may come later this year and in what increments.

New York Community Bancorp Inc.’s $500 million of 6.375% series A fixed-to-floating rate noncumulative preferreds – a deal priced Friday – freed to trade early Monday.

A trader saw the paper at $25.15 bid.

“That jumped dramatically since Friday,” he noted. At Friday’s close, the issue was at $24.80, he said.

The trader also commented that it wasn’t clear what had caused the surge, though he opined that it was due to manager support.

The issue is trading under a temporary ticker, “NYBCP.”

As for other recent issues, PennyMac Mortgage Investment Trust’s $115 million of 8.125% series A fixed-to-floating rate cumulative redeemable preferred stock listed on the New York Stock Exchange on Monday under the ticker symbol “PMTPrA.”

A trader saw the issue trading around $24.69.

The deal came to market on March 2, upsized from $75 million and in line with price talk.

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