Preferreds start weak, end slightly better as Greek hopes wane; Valley National issue tops par

By Stephanie N. Rotondo

Phoenix, June 25 – Preferred stock investors continued to keep an eye toward Greece in Thursday trading.

“Between interest rates and Greece, I guess we’ll see what happens,” one market source remarked.

As hopes of a debt deal for the struggling nation waned, the preferred market was initially losing ground. But by the end of the day, it had ticked up a touch.

The Wells Fargo Hybrid and Preferred Securities index closed 2 basis points higher, though it was off 6 bps at mid-morning.

The early weakness came even despite a new report from the Commerce Department showing that consumer spending had gained nearly 1%, the biggest gain since August 2009.

“With the exception of maybe some headline risk from Greece, I think it’s going to be a boring day,” a trader opined.

That position proved to be accurate, as another source noted that liquidity continued to be muted.

“It was slightly worse than [Wednesday],” the source said.

Recently priced issues did show signs of strength on Thursday. Valley National Bancorp’s $115 million of 6.25% series A fixed-to-floating-rate noncumulative perpetual preferred stock were moving up closer to par, a trader said.

He quoted the issue at $24.90 bid, par offered.

The shares continued to rise throughout the session, eventually popping up above par, closing a nickel better at $25.04.

The deal priced at par on June 16.

From the current week’s business, Wintrust Financial Corp.’s $125 million of 6.25% series D fixed-to-floating-rate noncumulative preferreds continued to lag. A trader pegged the shares at $24.65 bid, $24.72 offered.

However, another source said the issue ended a penny higher at $24.69. He noted that the volume-weighted average price, however, was a few cents weaker due to large low-priced trades that occurred early in the day.

That deal came Monday, also at par.

Integrys steady

Integrys Energy Group Inc.’s 6% $25-par junior subordinated notes due 2073 (NYSE: IEH) were holding their ground Thursday, a day after the company received regulator approval on its merger with Wisconsin Energy Corp.

The notes finished at $27.02, unchanged on the day.

On Wednesday, the Illinois Commerce Commission approved the $9.1 billion combination, though a formal written notice had yet to be received. Formal approval is expected in the coming days.

The Minnesota Public Utilities Commission approved the deal on June 12.

The merger was first announced just over a year ago on June 23, 2014. Under the terms, Wisconsin Energy agreed to pay $9.1 billion via a combination of cash and stock – 26% of the former and 74% of the latter.

Upon closing of the deal, Integrys shareholders will hold about 28% of the combined company’s equity.

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