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Midday Commentary: Preferred outflows might be stemmed for now, trader says; activity muted
By Stephanie N. Rotondo
Phoenix, June 13 - A preferred stock trader speculated that "the bleeding has stopped," at least for now.
A recent sell-off could be dying down, he said, adding "that's why you're seeing a bit of a bounce."
He noted that the iShares S&P US Preferred Stock index (PFF) had seen major outflows over the last week and a half.
But even as the market was believed to be stabilizing for the time being, activity remained subdued across the primary and secondary arenas.
"They priced two new deals [on Wednesday]," a trader said, referring to Gulf Power Co.'s $50 million of $100-par series 2013A noncumulative perpetual preferreds and Vanguard Natural Resources LLC's $55 million of 7.875% series A cumulative redeemable preferred units. "But I'm not seeing any follow-through markets."
Other recent deals, like Apollo Investment Corp.'s $135 million of 6.875% $25-par senior notes due 2043 and Allstate Corp.'s $250 million of 5.625% series A noncumulative preferreds, were holding in there.
A trader saw the Apollo paper at $24.60 bid and the Allstate issue at $24.70 bid.
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