Preferred stocks mixed; recent issues still busy, but less so; Fannie, Freddie weaken

By Stephanie N. Rotondo

Seattle, June 15 – Preferred stocks were on the mixed side on Thursday, just one day after the Federal Reserve announced an interest rate increase.

The Wells Fargo Hybrid and Preferred Securities index slipped 1 basis point. The U.S. iShares Preferred Stock ETF was up 13 bps.

Following its two-day policy meeting, the Fed’s Federal Open Market Committee said it was increasing benchmark interest rates to 1% to 1.25% from 0.75% to 1%. The increase was the second to occur in the last six months, and the committee projected that another rate hike will happen before the year is out.

One market source remarked that he expected trading volumes – which have been limited of late – “to pick up in the wake of the Fed decision.

“That seems to have not been the case,” he added.

Among recently priced but still not listed issues, Validus Holdings Ltd.’s $250 million of 5.8% series B noncumulative preference shares softened on the day, closing down 12 cents at $25.15.

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.”

NGL Energy Partners LP’s $185 million of 9% class B fixed-to-floating rate cumulative redeemable preferreds were initially lower but eventually finished up 9 cents at $24.90.

That issue priced June 6 and is trading under a temporary symbol, “NGGLP.”

As for Maiden Holdings Ltd.’s $150 million of 6.7% series D noncumulative preference shares, they moved in the exact opposite way of the NGL deal, initially trading up but ending weaker.

The paper closed at $25.05, down 19 cents. At mid-morning, the shares rose 11 cents to $25.35.

The deal came June 8, upsized from $100 million and tight to the 6.75% price talk. It is trading under a temporary symbol, “MDNHF.”

But for the first time all week, it wasn’t those recently priced deals that made up the bulk of trading.

Freddie Mac’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were actually the day’s most active issue, with over 1.07 million shares exchanged.

The GSE’s preferreds fell a nickel to $5.83.

Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were also down a nickel at $6.10.

Over 605,000 of those shares traded during the session.

Citigroup Inc.’s 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPrN) came in just above the Fannie issue. Unlike most of the other actively traded securities, however, it managed to firm up 2 cents to $26.09.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.