Morning Commentary: Preferred stocks look to recover; new deal flow could restart in week ahead

By Stephanie N. Rotondo

Seattle, May 19 – After two straight days of weakness, the preferred stock market was attempting to regain ground in early Friday trading.

However, liquidity continued to be constrained.

The Wells Fargo Hybrid and Preferred Securities index was up 8 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was up 20 bps.

The week failed to bring any new issues, but a trader said he was hearing talk of a “small deal for Monday.”

The trader added that he had not yet heard who the issuer might be, though earlier in the week a trader speculated a real estate investment trust might add to the calendar.

As for early secondary trading, Morgan Stanley & Co. Inc.’s 5.85% series K fixed-to-floating rate noncumulative preferreds (NYSE: MSPrK) were seen up a nickel at $26.52. Wells Fargo & Co.’s 5.625% series Y class A noncumulative preferreds (NYSE: WFCPrY) were also modestly better, firming 4 cents to $25.20.

The two issues were the top traders at mid-morning, though neither had traded above 100,000 shares.

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