Preferred stocks finish flat as liquidity remains thin; Red Mountain eyes Thursday pricing

By Stephanie N. Rotondo

Phoenix, Aug. 19 – Preferred stocks were initially edging higher again on Tuesday but came back in by the end of the day.

The Wells Fargo Hybrid and Preferred Securities index ended down 1 basis point after being up 4 bps at mid-morning.

“It’s just very, very quiet,” a trader said. “Things are just really slow. The [Treasury] bond market was down quite a bit yesterday and back again today. There’s not a lot of inquiries.”

One good indicator of overall liquidity in the market is iShares U.S. Preferred Stock ETF (NYSE: PFF). On average, about 1.78 million shares of the popular ETF change hands each day. In Tuesday trading, just under 1 million shares were exchanged.

In the primary space, Red Mountain Resources Inc. held a conference call to discuss a proposed offering of 10% series A cumulative redeemable preferreds.

The deal is being led by Northland Capital Markets and Euro Pacific Capital.

The company said it was planning on issuing $10 million of the preferreds, which will be in addition to the $6.4 million already outstanding but not listed. But demand has already exceeded that amount, according to Adam Connors of Northland Capital.

“So we are in process of quantifying demand,” he said.

Pricing is expected on Thursday after the market closes.

The new issue is slated to list on the Nasdaq Global Select Market under the ticker symbol “RMRAP.” The entire offering is contingent on the company’s common and preferred stock being approved to list on that exchange.

In recent deals, RAIT Financial Trust’s $70 million of 7.125% $25-par notes due 2019 were gaining ground as a trader said the issue was offered at $24.85.

The new issue priced Aug. 11.

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