Preferred stocks rebound after losing week; New York Community Bancorp brings upsized deal

By Stephanie N. Rotondo

Seattle, March 10 – After trending lower all week, preferred stocks were “bouncing a little bit, but not much,” a trader said Friday.

He said the course reversal came in response to a monthly U.S. jobs number that was “in line” with expectations.

The Wells Fargo Hybrid and Preferred Securities index rose 16 basis points. The U.S. iShares Preferred Stock index was up 34 bps.

Nonfarm payrolls added 235,000 jobs in February, according to the latest report from the Bureau of Labor Statistics.

Analysts had projected an addition of 190,000 jobs.

The unemployment rate was 4.7%, and average hourly wages increased by 2.8% on an annualized basis.

New York Community Bancorp Inc. brought an upsized $500 million of 6.375% series A fixed-to-floating rate noncumulative preferreds on Friday.

The company first announced the offering on Monday.

It was initially was reported that price talk was in the 6.375% area and that $400 million of the preferreds were to be sold.

A market source placed the issue at $24.90 bid.

Goldman Sachs & Co., Credit Suisse Securities (USA) LLC and BofA Merrill Lynch are the active joint bookrunners. Passive joint bookrunners include Citigroup Global Markets Inc. and Sandler O’Neill + Partners LP.

Meanwhile, Spark Energy Inc.’s $35 million of 8.75% series A fixed-to-floating rate cumulative redeemable preferreds – a deal priced Wednesday – freed to trade early in the session, according to a trader.

The trader saw the paper offered at $24.75.

At the bell, a source said the issue closed at $24.45, though he added that the level was “probably too low,” given that the volume weighted average price was $24.57.

Based on the VWAP, the preferreds ended the day up 2 cents compared to opening levels. But the actual closing price was down a dime from the open.

The deal came upsized from $30 million and in line with price talk.

The paper is trading under a temporary symbol, “SKYQP.”

RBC Capital Markets LLC and FBC Capital & Co. were the bookrunners.

As for other deals from the week, Two Harbors Investment Corp.’s $125 million of 8.125% series A fixed-to-floating rate cumulative redeemable preferreds were seen at $24.55 at the close, which compared to $24.60 bid in early dealings.

The VWAP was $24.61.

The closing price was down 12 cents day over day.

The issue came Tuesday, upsized from $75 million and at the tight end of the 8.125% to 8.25% price talk. It is trading under a temporary ticker, “TWHBP.”

Morgan Stanley & Co. LLC, UBS Securities LLC and Keefe Bruyette & Woods Inc. ran the books.

From last week’s business, PennyMac Mortgage Investment Trust’s $115 million issue of 8.125% series A fixed-to-floating rate cumulative redeemable preferred stock was deemed up 15 cents at $24.60.

A market source said the paper is expected to list on the New York Stock Exchange on Monday under the ticker symbol “PMTPrA.”

The preferreds have a temporary symbol, “PNNYP.”

The deal priced March 2. The amount was increased from $75 million, and the dividend matched price talk that had been set in the 8.125% area.

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