Preferred market skids as week starts; SoCal Edison selling shares; Capital One upsizes

By Stephanie N. Rotondo

Phoenix, Aug. 17 – Preferred stocks weakened Monday, even as the straight equity markets experienced a bump following positive housing data.

The markets were initially trending downward after the Empire State Manufacturing Survey showed a sharp contraction in August.

The Wells Fargo Hybrid and Preferred Securities index closed down 11 basis points.

“Liquidity was light in the market today,” a market source said. “I do not think you can make any conclusions about market direction other than there are a lot of people on vacation.”

But while the preferred space was kicking off the week with a softer tone, two new issues hit the tape early Monday.

Southern California Edison Co.’s SCE Trust IV announced an offering of fixed-to-floating-rate trust preference securities.

Capital One Financial Corp. also brought a deal, a sale of $500 million 6.2% fixed-rate series F noncumulative preferreds.

The deal was upsized from $250 million. Initial price talk was in a 6.25% to 6.375% range. That was then revised to 6.2% to 6.25%.

Just ahead of pricing, a trader pegged the shares at $24.90. Post-pricing, a market source said the issue was trading at $24.87.

Meanwhile, Fannie Mae and Freddie Mac preferreds dominated overall trading for the day. The GSEs’ paper closed down, which one market source attributed to troubles at Claren Road Asset Management, a hedge fund that has been a “big proponent of the GSE preferreds.”

© 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.