Preferreds attempt to recover Monday’s losses; Medley Capital deal comes discounted

By Stephanie N. Rotondo

Seattle, Dec. 15 – The preferred stock market was experiencing “a strong bounce back from yesterday on a lot of issues,” a trader said Tuesday.

The Wells Fargo Hybrid and Preferred Securities index ended 55 basis points higher, after having lost 1.65% on Monday amid a broader dumping of high-yield securities – or as the trader put it, “throwing their baby out with the bathwater.”

Still, the trader speculated that weakness could pervade the market once again leading up to or after the Federal Reserve’s policy meeting on Wednesday, though he personally believed that a probable interest rate increase was already factored in.

Expectations of a rate hike were also pushing up oil prices, which have been a key driver of the markets in the last year. Domestic crude improved 2.2% on the day, trading north of $37 a barrel.

The commodity’s price had plummeted on Monday to near 11-year lows.

But while oil prices rebounded, oil and gas-linked preferreds were mixed on the day.

As the market improved, Medley Capital Corp. announced it had sold $70 million of 6.5% $25-par notes due 2021.

A trader said the issue came at a discounted price of $24.7325 with a yield of 6.75%.

“It’s nice that they were willing to do that to get the deal done,” the trader said.

Keefe Bruyette & Woods Inc., Deutsche Bank Securities Inc., Sandler O’Neill & Partners LP and Janney Montgomery Scott LLC were the joint bookrunners.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.