Morning Commentary: Preferreds gain in early trading; Bank of America’s new issue nears par

By Stephanie N. Rotondo

Phoenix, Jan. 23 – The preferred stock market was bucking the trend of the broader markets Friday as it climbed in early trading.

The Wells Fargo Hybrid and Preferred Securities index was up 16 basis points at mid-morning.

Investors remained focused on Bank of America Corp.’s $1 billion of 6.5% series Y noncumulative preferreds, a deal that priced Tuesday and freed to trade late Wednesday.

A trader said the new deal was “moving up to $25 bucks.”

Paper was trading at $24.92 early in the day, up 7 cents from the previous close. Over 2.25 million shares had already traded.

Meanwhile, CHS Inc.’s $450 million of 7.5% class B series 4 cumulative redeemable preferreds (Nasdaq: CHSCL) – a deal that priced Jan. 13 – continued to gain momentum, rising a nickel to $25.83.

However, investors weren’t paying much attention to deals priced by Harvest Capital Credit Corp. and CorEnergy Infrastructure Trust Inc. on Thursday.

A trader said he had not yet seen any markets for Harvest’s $25 million of 7% $25-par notes due 2020. As for CorEnergy’s $50 million of 7.375% series A cumulative redeemable preferred stock, he saw that bid for at $24.60.

“That will probably be put away and we won’t see much of that,” he said of the latter issue.

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