Medley Capital to sell $25-par notes; THL Credit prices notes; Fannie, Freddie decline

By Stephanie N. Rotondo

Seattle, Dec. 10 – The preferred stock market was attempting to move up in early Thursday trading but once again gave up the initial gains to end in the red.

The Wells Fargo Hybrid and Preferred Securities index closed off 6 basis points. The index was up 1 bps at mid-morning.

The primary saw a new deal from Medley Capital Corp. added to the calendar. The business development company said it is planning to sell $25-par five-year notes, with proceeds going toward paying down debt.

In fact, the company intends to use the funds to redeem its $40 million of 7.125% $25-par senior notes due 2019 (NYSE: MCQ), according to a trader.

The 7.125% notes “go ex-dividend tomorrow, so it is probably a good buy,” the trader said.

Those notes were up 8 cents at $25.43.

Medley’s proposed offering comes on the heels of another deal from a business development company. THL Credit Inc. sold $30.5 million of 6.75% $25-par notes due 2022, according to a press release out early Thursday.

That company also plans to use proceeds to pay down debt.

In the secondary, Fannie Mae and Freddie Mac preferreds were weaker by day’s end. Trading in the issues remained active but less so than in recent sessions.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were off 7 cents, or 1.87%, at $3.68, while Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were off 8 cents, or 2.12%, at $3.69.

Crude slides, sector mixed

Domestic crude oil prices dropped over 1.6% on the day, trading sub-$37 for the first time since 2009.

The decline was due in large part to a report from OPEC, which showed that production in November jumped to its highest monthly level since 2012.

However, the oil and gas sector reacted in mixed fashion to crude’s downward spiral.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) finished the day 61 cents higher, or 10.87%, trading at $6.22. Goodrich Petroleum Corp.’s 10% series C cumulative preferreds (NYSE: GDPPC) were also better, rising 3 cents, or 3.85%, to 81 cents.

But Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) lost 18 cents, or 2.82%, ending at $6.20.

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