Preferreds gain ground as Yellen prescribes caution on rate increases; Torchmark upsized

By Stephanie N. Rotondo

Seattle, March 29 – Preferred stocks continued to trend higher in Tuesday trading as the market reacted to a speech from Janet Yellen, Federal Reserve chairman.

Yellen’s lunchtime speech in New York indicated that the central bank would exercise caution in raising interest rates in the future.

A trader also noted that the most recent report from the S&P/Case-Shiller Index was “a good sign for the markets.” The report indicated that home prices increased 5.7% in January.

The Wells Fargo Hybrid and Preferred Securities index ended up 10 basis points.

“Volume picked up a bit,” a market source remarked.

A couple of new deals were added to the calendar on Tuesday.

Torchmark Corp. announced plans to sell a minimum of $150 million of $25-par junior subordinated debentures due 2056. Price talk was around 6.25%, according to a market source.

The deal came upsized at $300 million and priced at par to yield 6.125%.

A trader saw the issue at $24.75 bid in the early gray market. Another source saw the issue at $25.05 bid, $25.15 offered “pretty late in day.”

BofA Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are running the books.

The McKinney, Texas-based insurance holding company said it plans to use the funds to redeem its outstanding $250 million of 6.375% senior notes due June 15.

On the heels of the new deal, Torchmark’s 5.875% $25-par junior subordinated debentures due 2052 (NYSE: TMKPB) were off 19 cents at $25.21.

Also added to the calendar was an offering of series A cumulative redeemable perpetual preferred units from Landmark Infrastructure Partners LP.

However, sources had not seen any pricing information after the market closed, nor were there any markets.

RBC Capital Markets, FBR, Janney Montgomery Scott LLC, Wunderlich Securities Inc., Incapital LLC and Oppenheimer & Co. are the joint bookrunners.

Meanwhile, the Gabelli Equity Trust Inc.’s $80 million of 5.45% series J cumulative redeemable preferreds – a deal priced Monday – freed to trade during the session, according to a market source.

That source pegged the preferreds at $24.92. Earlier in the day, a trader quoted the issue at $24.95 bid, par offered.

UBS Securities LLC and Wells Fargo Securities were the joint bookrunners.

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