Morning Commentary: Preferreds look to rebound; Public Storage launches first new deal of 2016

By Stephanie N. Rotondo

Seattle, Jan. 12 – The preferred stock market was attempting to rally in early Tuesday trading, after trading down on Monday.

“Everyone is trying to bounce it back here,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index was up 7 basis points at mid-morning.

The trader also noted that while there was some strength returning to the market, liquidity remained thin.

There were meantime signs of life in the primary space as Public Storage announced an offering of $75 million series B cumulative perpetual preferreds.

The deal – talked at 5.5% and coming via BofA Merrill Lynch, Morgan Stanley & Co. LLC and UBS Securities LLC – marked the first offering to hit the tape in 2016.

However, “it isn’t very attractive to me,” the trader said. “But Public Storage always trades pretty rich.”

The trader said he had yet to see any markets for the new issue.

Dividends will be payable on a quarterly basis. The preferreds become redeemable January 2021.

On the heels of the new deal, the Glendale, Calif.-based real estate investment trust’s 5.2% series W cumulative preferreds (NYSE: PSAPW) were sinking a bit, trading down a dime to $24.94.

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