Morning Commentary: Preferred stock trading wanes as Fed eyed; Validus’ new issue not yet free

By Stephanie N. Rotondo

Seattle, June 13 – Preferred stock trading was dwindling early Tuesday, as the market turned its eyes toward the Federal Reserve.

The central bank kicked off a two-day policy meeting on Tuesday, and investors are waiting to see if the Fed will opt to raise interest rates or not. One Reuters report indicated that there is a 94% chance that rates will rise, but one preferred stock trader wasn’t so sure.

“I’m not expecting a hike anytime soon,” he said. “I don’t think the current economic growth warrants a hike. Washington is stalled out, so we won’t see a tax cut or housing reform this year.”

As for the day’s dealings, Validus Holdings Ltd.’s $250 million of 5.8% series B noncumulative preference shares had not yet freed to trade as of mid-morning.

However, the paper was already assigned a temporary trading symbol, “VRRHP.”

A trader pegged the shares in a $24.95 to par context.

The deal came on Monday, upsized from $150 million and tight to the 5.875% price talk.

BofA Merrill Lynch and Morgan Stanley & Co. LLC ran the books.

Meanwhile, NGL Energy Partners LP’s $185 million of 9% class B fixed-to-floating rate cumulative redeemable preferred units were seen up a dime at $24.90.

That issue priced on June 6 and is trading under a temporary symbol, “NGGLP.”

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