Preferred stocks soft amid growing geopolitical concerns; GSEs rebound; Scorpio lists

By Stephanie N. Rotondo

Seattle, April 11 – The preferred stock market was giving up some gains in Tuesday trading.

Preferreds were following the broader markets lower, as geopolitical concerns – specifically in regards to the Middle East and the Korean Peninsula – had investors looking to safer investments.

The Wells Fargo Hybrid and Preferred Securities index traded down 10 basis points. The U.S. iShares Preferred Stock ETF finished 15 bps lower, though it was off 28 bps at mid-morning.

Fannie Mae and Freddie Mac dominated the trading space and even managed to end with a firm tone, despite the day’s overall weakness.

A market source noted that he had not seen anything new to cause the volume surge or the course reversal.

Fannie’s variable rate series O noncumulative preferreds (OTCBB: FNMFN) put on $1.00, or 10%, closing at $11.00, while the 8.25% series T noncumulative preferreds (OTCBB: FNMAT) were up 75 cents, or 13.51%, at $6.30.

The latter issue had been off a nickel at mid-morning, trading at $5.50.

And, the 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) rose 47 cents, or 8.33%, to $6.11.

In Freddie paper, the 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) improved 34 cents, or 6.33%, to $5.71.

Among recently priced issues, Scorpio Tankers Inc.’s 8.25% $25-par senior notes due 2019 – a $50 million issue priced on March 28 – were admitted to the New York Stock Exchange on Tuesday.

The ticker symbol is “SBBC.”

The notes closed the day at $25.27, which compared to par at the open.

Stifel Nicolaus & Co. Inc. and Janney Montgomery Scott LLC were the joint bookrunners.

Meanwhile, Tsakos Energy Navigation Ltd.’s $115 million of 9.25% series E fixed-to-floating rate cumulative redeemable preferred stock (NYSE: TNPPrE) was also somewhat active, slipping 11 cents to $25.20.

The issue was admitted to the NYSE on Monday.

The original $100 million deal came March 29, upsized from $50 million and in line with the 9.25% area price talk. On April 3, it was reported that a $15 million greenshoe had been exercised, bringing the total amount outstanding to $115 million.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, UBS Securities LLC, Citigroup Global Markets Inc. and Stifel Nicolaus ran the books.

CorEnergy to bring add-on

CorEnergy Infrastructure Trust Inc. announced a $50 million add-on offering of its 7.375% series A cumulative redeemable preferred stock (NYSE: CORRPrA) on Tuesday.

At Tuesday’s close, the preferreds were seen at $25.35, down 2 cents for the day.

Wells Fargo Securities LLC and Sitfel Nicolaus are the joint bookrunners. Drexel Hamilton is the co-manager.

There is $56.25 million of the preferreds outstanding.

Proceeds will be used to repay debt under a credit facility and/or for general corporate purposes.

CorEnergy is a Kansas City, Mo.-based company that primarily owns midstream and downstream U.S. energy infrastructure assets subject to long-term triple net participating leases with energy companies.

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