Morning Commentary: Health care vote eyed; Global Indemnity better; AmTrust preferreds rebound

By Colin Hanner

Chicago, March 23 – Volume was very light in the preferred space on Thursday morning, as traders looked to a vote on U.S. health care legislation for hints about the direction of the market.

The Wells Fargo Hybrid and Preferred Securities index was up 9 basis points at mid-morning, while the U.S. iShares Preferred Stock ETF was up 16 bps.

With the House set to vote on a Republican-backed health care measure at some point on Thursday, the decision could say more about the ability of a new Administration to get legislation passed than the bill itself, a trader said.

“With approval rating of the president so low, and likelihood of things getting done in Congress, people are saying, ‘Well, we’re not going to have the growth that we expected in this [administration],’” the trader said.

The passage of the bill could paint a clearer picture for fiscal policy under a Trump administration, the trader said, but if all fails, markets will be treading in some murky waters.

“If this health care [legislation] fails miserably, that could cause some selloff in the market and people could look at [preferreds],” the trader said.

In the new deal space, Global Indemnity Ltd.’s $120 million of 7.875% $25-par subordinated notes due 2047, a deal priced one week ago, were trading at $24.85 and still without a symbol, a trader said.

With noteworthy volume in the secondary space lacking, AmTrust Financial Services Inc.’s 7.75% series E noncumulative depository preferreds (NYSE: AFSIPrE) were up 20 cents, or 0.90%, to $22.10.

A trader said he was looking at the preferred issuances of AmTrust closely following admittance of accounting issues with its 10-K filing in late February.

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