QTS Realty Trust down in gray market; recent preferred stock, baby bond deals weaken

By Abigail W. Adams

Portland, Me., March 8 – The primary market remained active in the preferred space with a new preferred stock offering in the pipeline.

QTS Realty Trust Inc. launched an offering of $25-par perpetual series A cumulative redeemable preferred stock on Wednesday. As of Thursday, the deal had not yet priced, but it was seen trading down in the gray market, a market source said.

While the primary market prepares new paper, the preferred stock and baby bond deals that priced recently were all seen trading down on Thursday.

1347 Property Insurance Holdings Inc.’s 8% series A perpetual cumulative preferred stock, Compass Diversified Holdings’ recently priced 7.875% series B fixed-to-floating rate cumulative preferred shares and CMS Energy Corp.’s 5.625% $25 par notes due 2078 were all down at the market close.

Fannie Mae’s 8.25% series S preferred stock and Freddie Mac’s 8.375% preferreds were in focus on Thursday with both seeing gains in high-volume trading.

QTS’s deal

QTS Realty Trust’s offering of $25-par perpetual series A cumulative redeemable preferred stock is still in the works, but the offering was seen down in the gray market, a market source said. The preferreds were seen at $24.62 to $24.67.

“The gray market is indicating they won’t do so well,” a market source said.

Recent deals down

While QTS was down in the gray market, recently priced deals were down in active trading. 1347 Property Insurance’s 8% series A preferreds closed Thursday at $24.60, a decrease of 15 cents or 0.61%.

1347 Property Insurance priced $16 million, or 640,000 shares, of 8% series A perpetual cumulative preferred stock at $25.00 per share on Feb. 23. It was the first new issue of preferred stock since volatility hit the markets in late January.

The preferred stock from the Tampa, Fla.-based insurance holding company freed for trade on the OTC market under the temporary ticker “PPNSP.” The preferred stock will be listed on Nasdaq under the ticker “PIHPP.”

Compass’ 7.875% series B fixed-to-floating rate cumulative preferred shares were also down in active trading on Thursday. The preferreds closed Thursday at $24.30, a decrease of 35 cents or 1.42%.

The preferred shares saw heavy trading volume on Thursday with more than 779,000 shares in play.

Compass priced $100 million, or 4 million shares, of the $25-par series B cumulative preferred stock on Tuesday.

The preferred stock from the trust of the Westport, Conn.-based limited liability company that acquires and manages small and middle-market businesses freed to trade on OTC markets under the temporary ticker “CMPDP.”

It will be listed for trade on the New York Stock Exchange under the ticker “CODIPrB.”

CMS Energy’s 5.625% baby bonds were also seen trading below their issue price on Thursday.

The baby bonds closed Thursday’s session at $24.90, according to a market source. CMS Energy priced $200 million of the 5.625% $25-par junior subordinated notes due 2078 on Monday.

GSE’s in focus

Preferreds from Fannie Mae and Freddie Mac were again in focus on Thursday and saw gains in heavy trading.

Fannie Mae’s 8.25% series S preferred stock closed Thursday at $6.95, an increase of 23 cents or 3.42%. Freddie Mac’s 8.375% preferreds closed Thursday at $6.90, an increase of 32 cents or 4.86%.

Both of the preferreds saw 2.43 million shares in play during Thursday’s session, which is almost double their average trading volume.

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