Arbor Realty, Scorpio Tankers free up; American Capital below par; American Homes lists

By Stephanie N. Rotondo

Phoenix, May 8 - Preferred stocks remained firm as Thursday trading began and stayed that way throughout the session.

The Wells Fargo Hybrid and Preferred Securities index was up 3 basis points as of mid-morning. It closed up 7 bps.

In the primary space, Arbor Realty Trust Inc.'s $55 million of 7.75% $25-par senior notes due 2021 - a deal that priced late Wednesday - were seen at $24.55 bid early in the session.

After the close, a market source said the preferreds were "all over the place because of the syndicate." The issue ended the day at $24.56, he said, but the volume weighted average price was $24.71.

The source also noted that the issue freed to trade.

Also freed to trade were Scorpio Tankers Inc.'s $50 million of 6.75% $25-par notes due 2020, a deal that came Wednesday as well.

A source said the notes dropped 28 cents to finish at $24.72.

From Tuesday's business, American Capital Agency Corp.'s $175 million of 7.75% series B cumulative redeemable preferreds were pegged at $24.65 bid early in the day. A source said the issue closed at $24.67, down 6 cents from the previous session.

The source added that the newly priced issue was among the day's most actively traded securities.

In the secondary, Fannie Mae and Freddie Mac preferreds were initially trying to move up after the government-backed mortgage guarantors released earnings. However, the shares ended the session mostly weaker.

The agencies reported profits again, though smaller than the previous periods.

Fannie, Freddie post earnings

Freddie and Fannie preferreds gyrated in Thursday trading as the agencies reported results for the first quarter.

Initially, the preferreds looked like they were going to firm up, given that the companies posted profits - albeit more modest profits, due to a generally weak housing market.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were up a nickel at $10.80 at mid-morning. By the close, they were off the same amount at $10.70.

Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were meantime seen steady at $10.23 early in the day. At the bell, the paper was off 8 cents at $10.15.

For the quarter, Fannie reported net income of $5.3 billion. Its ninth straight quarterly profit, the quarter still underperformed that of 2013 when the company posted earnings of $58.7 billion.

As for Freddie, its net income was $4 billion, down from $4.6 billion the year before.

Because of its bailout agreement with the U.S. Treasury, Fannie and Freddie will be sending much of those profits to the taxpayer, to the tune of a combined $10.2 billion.

The payment will be made via a dividend in June. Both Fannie and Freddie have already repaid the funds borrowed during the economic crisis and these payments will result in a profit of about $26 billion for the government.

New exchange listings

American Homes 4 Rent's $185 million of 5.5% series C preferred shares of beneficial interest were admitted for trading on the New York Stock Exchange.

The deal priced April 29. The ticker symbol is "AMHPC."

Paper was trading at $24.85 at mid-morning. It closed at $24.80.

Those levels compared to opening levels of $24.82.

The bookrunners were Morgan Stanley & Co. LLC, Raymond James & Associates Inc. and Jefferies LLC. Keefe, Bruyette & Woods Inc. and Robert W. Baird & Co. Inc. also participated.

Meanwhile, Safe Bulkers Inc.'s $50 million of 8% series C cumulative redeemable preferreds - a deal that came April 30 - will list on the NYSE on Friday, a market source reported.

The ticker symbol is "SBPC." On Wednesday, the Athens, Greece-based drybulk shipping company said its $7.5 million greenshoe had been fully exercised.

A trader quoted the issue at $25.05 bid, $25.15 offered not long before the market closed for the day.

© 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.