Morning Commentary: Preferreds aim for strong finish to week; Global Indemnity so-so post-pricing

By Stephanie N. Rotondo

Seattle, March 17 – Preferred stocks were looking to finish out the week with a firm tone.

The Wells Fargo Hybrid and Preferred Securities Index was up 14 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was up 12 bps.

The week kicked off on the weaker side, but started to trade better after the Federal Reserve lifted interest rates by a quarter-point on Wednesday.

Global Indemnity Ltd. brought $120 million of 7.875% $25-par subordinated notes due 2047 late Thursday.

The deal came upsized from $75 million and at the tight end of the 7.875% to 8% price talk.

In early Friday trading, a trader saw the issue at $24.55 bid. Though that wasn’t a remarkable performance, the trader opined that it would improve.

“That’s how that Two Harbors [Investment Corp. deal] was when it came out,” the trader noted. But in recent days, the Two Harbors paper – a $125 million issue of 8.125% series A fixed-to-floating rate cumulative redeemable preferreds (NYSE: TWOPrA) that priced March 7 – has pushed up dramatically.

In fact, Two Harbors was seen at $25.28 in early dealings on Friday, a gain of 8 cents on the day.

The Global Indemnity deal is expected to free to trade on Monday, according to a trader.

Morgan Stanley & Co. LLC, UBS Securities LLC and RBC Capital Markets ran the books.

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