Morning Commentary: Preferred stocks start week with mixed tone; Global Indemnity eyed

By Stephanie N. Rotondo

Seattle, March 27 – Preferred stocks were mixed as the final trading week of March got underway.

The Wells Fargo Hybrid and Preferred Securities index was off 15 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was meantime up 4 bps.

A trader commented that with Friday’s “failure of the health care bill,” Treasury bonds were rallying as investors turned their attention toward the Trump administration’s promises of a reformed tax code.

In particular, preferred stock investors will be looking to see how the plan will impact utilities and bank holding companies. The trader said that certain provisions, such as how such entities deduct interest expenses, could play a role in how ratings are assigned, which could shake up the market.

But with no forward movement detected as of yet on Trump’s tax plan, the preferred market was on the quieter side, a trader reported.

Global Indemnity Ltd.’s $120 million of 7.875% $25-par subordinated notes due 2047 – a deal priced March 16 – were seen at $24.90 bid, $24.95 offered in early dealings.

A trader said the new issue is expected to list on the Nasdaq Global Select Market later this week. The expected ticker symbol is “GBLIL.”

Meanwhile, Deutsche Bank AG’s 8.05% trust preferred securities (NYSE: DKT) were active in early trading, rising 3 cents to $26.30.

There was no fresh news to move the TruPs around.

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