Morning Commentary: Preferred stocks aim to recover; PennyMac not yet free; Wells Fargo falters

By Stephanie N. Rotondo

Seattle, June 28 – The preferred stock market was looking to regain ground lost in the previous session on Wednesday.

At mid-morning, the Wells Fargo Hybrid and Preferred Securities Index was up 4 basis points and the U.S. iShares Preferred Stock ETF was up 18 bps.

The Wells Fargo index closed off 3 bps on Tuesday while the ETF declined 23 bps.

PennyMac Mortgage Investment Trust’s $175 million of 8% series B fixed-to-floating rate cumulative redeemable preferreds – a deal priced on Tuesday – had not yet freed to trade in early dealings, according to one trader.

The trader quoted the paper at $24.70 bid, $24.80 offered in the gray market.

The deal came at the tight end of the 8% to 8.125% price talk and was upsized from $75 million.

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

The dividend rate will begin to float on June 15, 2024 at Libor plus 599 basis points. The paper also becomes redeemable on that date.

Meanwhile, among listed securities, liquidity remained thin, though Wells Fargo & Co.’s 5.625% series Y class A noncumulative preferreds (NYSE: WFCPrY) were somewhat busy.

However, the issue was bucking the early positive trend, slipping 4 cents to $26.27.

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