Preferreds strong as Fed maintains rates; Gabelli prices; American Financial frees up

By Stephanie N. Rotondo

Phoenix, Sept. 17 – The preferred stock market ended strongly after gaining ground early Wednesday ahead of a statement from the Federal Reserve.

The Wells Fargo Hybrid and Preferred Securities index finished 26 basis points higher.

“Volume was much higher today,” a market source said.

In its statement after its monthly meeting, the Fed said that it would keep interest rates at lower levels for some time, choosing to hike rates once data supports doing so and not focusing on a specific calendar date.

With the central bank’s quantitative easing program slated to end in October – the bond repurchase program was cut to $15 billion a month – the Fed said rates would stay low for “a considerable time” once the easing eased.

The Gabelli Healthcare & WellnessRx Trust priced a $35 million offering of 5.875% series B cumulative perpetual preferreds ahead of the market’s close.

The deal came at the tight end of 5.875% to 6% talk.

BofA Merrill Lynch ran the books.

Post-pricing, a trader quoted the issue at $24.70 bid, $24.80 offered.

American Financial Group Inc.’s $150 million of 6.25% $25-par subordinated notes due 2054 were eyeing par in early Wednesday trading, according to a trader.

He quoted the issue at $24.80 bid, $24.85 offered.

The deal came on Monday, upsized from $100 million and at the tight end of talk.

The new issue came via BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC.

Paper freed to trade at 11 a.m. ET.

HSBC, RBS busy

United Kingdom banks were busy ahead of a Thursday vote on Scotland’s independence.

HSBC USA Inc.’s preferreds finished the day weaker, its floating-rate series F noncumulative preferreds (NYSE: HUSIPF) sliding 3 cents to $21.64. The floating-rate series G noncumulative preferreds (NYSE: HUSIPG) declined 6 cents to $22.65.

But while HSBC’s shares were down, Royal Bank of Scotland Group plc gained traction.

The 5.9% noncumulative guaranteed trust preferred securities (NYSE: RBSPE) gained 11 cents to end at $23.67, while the 6.08% noncumulative guaranteed trust preferred securities (NYSE: RBSPG) put on 16 cents to finish at $23.73.

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