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Morning Commentary: Preferred stocks firm ahead of Fed decision; Validus climbs higher
By Stephanie N. Rotondo
Seattle, June 14 – The preferred stock market continued to gain ground early Wednesday ahead of the Federal Reserve’s latest policy announcement.
The Wells Fargo Hybrid and Preferred Securities index was up 23 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was up 22 bps.
The Federal Reserve’s Federal Open Market Committee kicked off its quarterly meeting on Tuesday. The market is forecasting that the FOMC will choose to raise interest rates this month, as economic indicators have continued to improve.
The announcement will come Wednesday afternoon.
And while a trader noted that the Fed’s meeting was keeping investors preoccupied, recently priced deals continued to be on the more active side.
Validus Holdings Ltd.’s $250 million of 5.8% series B noncumulative preference shares, for instance, were quite busy, with over 2.04 million shares being exchanged by mid-morning.
One trader quoted the issue in a $25.18 to $25.22 context, though another source called the paper up a nickel at $25.10.
The deal came on Monday, upsized from $150 million and tight to the 5.875% price talk. It freed to trade on Tuesday and was assigned a temporary ticker symbol, “VRRHP.”
Meanwhile, NGL Energy Partners LP’s $185 million of 9% class B fixed-to-floating rate cumulative redeemable preferreds remained firm, adding 3 cents to trade at $24.89.
That issue priced June 6 and is trading under a temporary symbol, “NGGLP.”
And, Maiden Holdings Ltd.’s $150 million of 6.7% series D noncumulative preference shares pushed up 4 cents to $25.10.
The deal came on Thursday, upsized from $100 million and tight to the 6.75% price talk. It is trading under a temporary symbol, “MDNHF.”
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