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Morning Commentary: Preferreds remain under pressure; Two Harbors frees to trade; Spark fades
By Stephanie N. Rotondo
Seattle, March 9 – Preferred stocks continued their losing streak on Thursday.
“Everything is getting hit with the bond market off,” a trader said.
The Wells Fargo Hybrid and Preferred Securities index was down 54 basis points at mid-morning. The U.S. iShares Preferred Stock index was off 40 bps.
The pervasive weakness wasn’t doing much to help recently priced deals, either.
Two Harbors Investment Corp.’s $125 million of 8.125% series A fixed-to-floating rate cumulative redeemable preferreds freed to trade early in the session, according to a trader.
The deal priced Tuesday.
The trader saw the issue trading around $24.54.
The deal came upsized from $75 million and at the tight end of the 8.125% to 8.25% price talk.
Morgan Stanley & Co. LLC, UBS Securities LLC and Keefe Bruyette & Woods Inc. ran the books.
Spark Energy Inc.’s $35 million of 8.75% series A fixed-to-floating rate cumulative redeemable preferreds – a deal priced late Wednesday – were meantime seen offered at $24.65, though a trader noted that he was “not hearing much” going on in the new issue.
The deal came upsized from $30 million and in line with price talk.
RBC Capital Markets LLC and FBC Capital & Co. are the bookrunners.
From last week’s business, Apollo Global Management LLC’s 6.375% series A preferreds (NYSE: APOPrA) were losing ground as well, slipping to $24.51. That compared to $24.75 at the open.
That issue priced Feb. 28.
And, PennyMac Mortgage Investment Trust’s 8.125% series A fixed-to-floating rate cumulative redeemable preferreds – a $115 million issue priced March 2 – was pegged at $24.45 bid.
The preferreds are trading under a temporary symbol, “PNNYP.”
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