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Morning Commentary: Preferreds continue to rise; Tsakos bringing fixed-to-floating issue
By Stephanie N. Rotondo
Seattle, March 29 – The preferred stock market extended its prior-day gains into the midweek session on Wednesday, according to early index readings.
The Wells Fargo Hybrid and Preferred Securities index was up 8 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was up 18 bps.
Tsakos Energy Navigation Ltd. announced a $50 million offering of series E fixed-to-floating rate cumulative redeemable preferreds early in the day.
Price talk is around 9.25%, according to a market source.
A trader pegged the deal at $24.60 bid, $24.80 offered in the gray market.
Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, UBS Securities LLC, Citigroup Global Markets Inc. and Stifel Nicolaus & Co. Inc. are running the books.
The Athens, Greece-based seaborne oil transporter’s new issue comes on the heels of a similar deal from Scorpio Tankers Inc., which priced late Tuesday.
New York-based Scorpio sold $50 million of 8.25% $25-par senior notes due 2019, coming in line with price talk.
Stifel Nicolaus and Janney Montgomery Scott LLC led that deal.
The notes were seen in a $24.63 to $24.75 context in early dealings.
In the wake of the new issues, Tsakos’ 8.75% series D cumulative redeemable preferreds (NYSE: TNPPrD) were trading off 39 cents, or 1.55%, to $24.70.
However, Scorpio’s 7.5% $25-par notes coming due in October (NYSE: SBNB) were slightly better after declining in the previous session.
The notes were up 2 cents at $25.09 at mid-morning.
Scorpio plans to use the new proceeds to fund a tender offer for the 7.5% baby bonds. The tender expires April 11, and participating holders will receive par plus accrued interest.
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