Preferreds weaker as Greece deal remains elusive; recent issues hold in; liquidity thins

By Stephanie N. Rotondo

Phoenix, June 26 – A preferred stock trader said the secondary market was “barely soft” Friday.

The Wells Fargo Hybrid and Preferred Securities index dropped 16 basis points by the end of the day.

“It should be softer,” the trader said, noting Treasury rate moves linked to the ongoing saga in Greece.

“They might get something done, whether it’s a can-kick or whatever,” he said. If that does happen, it could diminish investors’ desires to run to quality.

As of early Friday, a deal between Greece and its E.U. creditors had not been inked. There is a deadline of June 30 to get something done.

With the softness of the market, recent issues were initially slipping but ended about unchanged.

Wintrust Financial Corp.’s $125 million of 6.5% series D fixed-to-floating-rate noncumulative perpetual preferreds, a deal from June 22, were quoted at $24.60 bid, $24.75 offered at mid-morning and closed at $24.69.

The issue ended Thursday at $24.68.

Valley National Bancorp’s $115 million of 6.25% series A fixed-to-floating-rate noncumulative perpetual preferreds were also retreating after popping up above par on Thursday.

That issue, which priced June 16, was pegged at $24.90 bid, $24.97 offered. The paper ended at $24.95.

The shares had finished Thursday’s session at $25.04.

A market source noted that liquidity going into the weekend was quite limited.

“Volume was worse than yesterday,” he said.

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