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Midday Commentary: Mortgage worries weigh on mortgage-related preferreds; primary ramps up
By Stephanie N. Rotondo
Phoenix, Nov. 14 - A preferred stock trader Wednesday said that mortgage-backed preferreds have been declining recently.
"I don't know if it's profit-taking or if people are scared of mortgages," the trader said. He noted that such paper has fallen because of inflation fears and worries that companies based on anything mortgage related were over-leveraged.
Of such companies, Invesco Mortgage Capital Inc. - an investor in mortgage-backed securities - saw its 7.75% series A cumulative redeemable preferreds fall 18 cents by midday to $25.07.
Meanwhile, in the primary market, three new issues were announced.
NextEra Energy Capital Holdings Inc. said it was selling series I junior subordinated debentures due Nov. 15, 2072.
The $25-par issue was talked at 5.125% to 5.25%, according to a trader.
"It will probably price today," a trader said, seeing the issue at $24.75 in the midday gray market.
Taylor Capital Group Inc. meantime said it intended to price an offering of at least $100 million series A noncumulative perpetual preferreds.
Price talk is around 8%, a trader reported. However, the trader said he had not seen any markets for the new issue.
And, Prudential Financial Inc. heralded plans to issue $25-par fixed-to-floating rate subordinated notes due June 15, 2043.
A trader said he had not seen any talk on that deal.
"With the Wells Fargo [& Co. issue that priced Tuesday] and NEE Capital coming out, they may wait until [Thursday to bring the deal]," the trader said.
Concerning the new Wells Fargo issue - a $600 million offering of 5.125% series O noncumulative perpetual class A preferreds - a trader said the issue was "seconds" from freeing up, trading in a $24.64 to $24.67 context.
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