Morning Commentary: Preferreds aim to end month on a high note; PennyMac firms; Compass to list

By Stephanie N. Rotondo

Seattle, June 30 – Preferred stocks were attempting to recover losses from Thursday as month-end trading got underway on Friday.

The Wells Fargo Hybrid and Preferred Securities Index was up 3 basis points, while the U.S. iShares Preferred Stock ETF was up 15 bps.

PennyMac Mortgage Investment Trust’s $175 million of 8% series B fixed-to-floating rate cumulative redeemable preferreds – a deal priced Tuesday – continued to be in focus, rising 22 cents to $24.85.

The deal came at the tight end of the 8% to 8.125% price talk and was upsized from $75 million. It is currently trading under a temporary ticker, “PNNMP.”

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

Meanwhile, a market source said that Compass Diversified Holdings LLC’s $100 million of 7.25% series A preferred stock is expected to list on the New York Stock Exchange on Monday under the ticker symbol “CODIPrA.”

The issue currently has a temporary symbol, “CMMPP.”

A trader said that paper was trading around $24.75, but that the preferreds “should move higher” once listed.

The company priced the inaugural preferred issue on June 19 via BofA Merrill Lynch and UBS Securities LLC.

Away from new and recent issues, Wells Fargo & Co.’s preferreds remained under pressure. The bank has been losing ground since the stress test results were announced even though the Federal Reserve approved its capital plan. Investors had been concerned that the central bank may not act in favor of Wells, given a massive sales scandal in September 2016.

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