Preferred trading stays thin post-stress tests; banks more active, firm; recent deals lose luster

By Stephanie N. Rotondo

Seattle, June 23 – The preferred stock market was again on the firmer side on Friday though hopes for a bump in trading volume appeared to be dashed.

On Thursday, a market source opined that the release of the Federal Reserve’s first round of bank stress test results – in which all U.S. banks were found to have sufficient capital to weather a significant economic downturn – could entice investors into the market.

But come Friday, a trader noted that there was “nothing going on.”

Still, banks got a little busier and even traded up – for the most part – in the wake of the stress test results.

Wells Fargo & Co.’s 5.625% class A series Y noncumulative preferreds (NYSE: WFCPrY) added 4 cents to close at $26.31, while Bank of America Corp.’s 6.2% series CC noncumulative prefereds (NYSE: BACPrC) gained 9 cents to trade at $26.93.

However, Citigroup Inc.’s 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPrN) dipped a penny to $26.11.

Investors will now be looking toward the second round of stress-test results in the week ahead. These results will show whether or not the Fed will approve proposals to return capital to shareholders. In particular, Wells Fargo is expected to be under significant scrutiny, given its sales scandal back in September.

Recent deals quiet

But as for recently priced issues, they seemed to be losing their appeal, as there was limited trading in Southern California Edison Co.’s SCE Trust VI’s $475 million of 5% series L trust preference shares or Compass Diversified Holdings LLC’s $100 million of 7.25% series A preferred stock.

The SCE Trust issue ended the day off 3 cents at $24.95, after it was quoted at $24.96 bid, $24.98 offered in earlier dealings. The Compass paper closed 5 cents weaker at $24.80. The preferreds were pegged at $24.80 bid, $24.87 offered at mid-morning.

Validus Holdings Ltd.’s 5.8% series B noncumulative preference shares (NYSE: VRPrB), however, were a little more active, ticking up 8 cents to $25.35.

The $250 million deal priced June 13 and began trading on the New York Stock Exchange on Wednesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.