Preferreds down amid emerging market fears; National General’s notes trade on Nasdaq

By Stephanie N. Rotondo

Phoenix, Aug. 20 – Preferred stocks were weak in Thursday trading but were holding up better than the broader markets.

The Wells Fargo Hybrid and Preferred Securities index ended off 9 basis points, or just over 2 cents on average for $25-par paper. By comparison, the Dow Jones industrial average was off more than 350 points, a total of over 2%.

The broader weakness came as global markets declined and investors continued to worry about China’s slowing growth.

“It’s big picture stuff,” a market source said of the day’s losses. “Spreads were widening. The stock market was way off, driven mainly by fear of emerging markets.”

A trader said that National General Holdings Corp.’s $100 million of 7.625% $25-par notes due 2055 began trading on the Nasdaq Select Global Market on Wednesday under the ticker symbol “NGHCZ.”

“I don’t think many people realized that,” he said, noting that his impression was that it was a temporary symbol.

Upon listing, the issue tanked, the trader said. The notes had dropped to $24.18 in midweek trading but managed to rally 4 cents in Thursday trading, ending at $24.22.

However, the trader pointed out that “all of their other issues are trading just below [par],” opining that the losses in the newer deal were due to “somebody just dumping” their holdings.

Meanwhile, other recent issues remained in focus in another “really, really light” volume day, according to a source.

Capital One Financial Corp.’s $500 million of 6.2% fixed-rate series F noncumulative preferreds, for instance, traded about 927,000 times, a source said, ending off a penny at $24.94. Southern California Edison Co.’s SCE Trust IV’s $325 million of 5.375% fixed-to-floating rate trust preference securities were meantime up a dime at $25.50, with about 402,000 shares trading.

Looking ahead, a trader speculated that there “probably won’t be any deals next week,” as he was hearing chatter that a major manager on several recently priced deals planned to be out. “It will probably be quiet until September.”

Vanguard sets distribution

Vanguard Natural Resources LLC announced monthly distributions on its preferred units on Thursday.

Ahead of the announcement – which came just after the market closed – the 7.875% series A cumulative redeemable perpetual preferred units (Nasdaq: VNRAP) jumped 30 cents, or 1.46%, to $20.81.

The 7.625% series B and 7.75% series C units, however, were a little weaker.

The Bs (Nasdaq: VNRBP) dipped a penny to $16.15, while the Cs (Nasdaq: VNRCP) fell 8 cents to $16.65.

All three issues saw above-average trading on the day.

The distributions – 16.41 cents per A unit, 15.885 cents per B unit and 16.146 cents per C unit – will be paid on Sept. 14.

The Houston-based oil and gas company also declared a distribution on its common units.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.