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Morning Commentary: Preferred stock market flat ahead of Fed news; Valley National frees to trade
By Stephanie N. Rotondo
Phoenix, June 17 – A preferred stock trader said the market was “in a holding pattern” early Wednesday.
The Wells Fargo Hybrid and Preferred Securities index was flat at mid-morning.
The lack of movement came as investors waited to see what the Federal Open Market Committee would say after the conclusion of its two-day meeting. It is widely anticipated that the central bank will indicate its intent to raise interest rates in September – the first hike in nine years.
Valley National Bancorp brought $115 million of 6.25% series A fixed-to-floating rate noncumulative preferreds late Tuesday.
The deal came upsized from $110 million and in line with talk.
On Wednesday, a trader said the issue freed early in the day and was “moving up.”
He saw the issue trade at $24.98.
The preferred offering – which was led by Sandler O’Neill + Partners LP, Keefe Bruyette & Woods Inc. and RBC Capital Markets – was done concurrently with a $100 million sale of 4.55% subordinated debentures due 2025. That issue also came upsized, from $90 million.
When declared, dividends on the preferreds will be fixed and payable semiannually through June 30, 2025. After that, dividends will be payable quarterly and will be calculated at Libor plus 385 basis points.
The preferreds become redeemable on or after June 30, 2025 or within 90 days of a regulatory capital treatment event at par plus accrued dividends.
In other recent deals that have yet to list, AmTrust Financial Services Inc.’s $150 million of 7.25% $25-par junior subordinated notes due 2055 – a deal priced Thursday – were also continuing to improve, according to a trader.
The trader pegged the notes in a $24.80 to $24.90 context, seeing a $24.85 trade.
The issue – which came via Morgan Stanley & Co. LLC, UBS Securities LLC and Keefe Bruyette & Woods – freed to trade on Monday.
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