Preferreds rise as equities decline on Greece news; AmTrust Financial frees, weakens

By Stephanie N. Rotondo

Phoenix, June 15 – The secondary preferred stock market was seeing a “very muted reaction” to word that talks between Greece and E.U. leaders had collapsed over the weekend, according to a trader.

The Wells Fargo Hybrid and Preferred Securities index – which was flat at mid-morning – ended the day up 16 basis points, or about 4 cents on average for $25-par paper. By comparison, the Dow Jones industrial average was off more than 100 points.

Overall liquidity remained thin, according to a market source, though he noted that Monday’s volume was “not as bad as last week.”

Though the Greece news was having little impact on the preferred space, there could be a spark of volatility on the horizon: the Federal Open Market Committee will begin its two-day meeting on Tuesday, with an announcement – and likely some indication of when a short-term interest rate increase will occur – slated for late Wednesday.

In recent deals, AmTrust Financial Services Inc.’s $150 million of 7.25% $25-par junior subordinated notes due 2055 – a deal priced Thursday – freed from the syndicate early Monday, as was expected.

A market source saw the notes ending at $24.53, which he said was “toward the low of the day.” The volume weighted average price was $24.57.

A trader saw the issue steady at $24.60 bid early in the session.

Meanwhile, JPMorgan Chase & Co.’s 6.1% series AA noncumulative preferreds began trading on the New York Stock Exchange under the ticker symbol “JPMPG.”

The $1.425 billion issue, which includes $125 million from an exercised greenshoe – priced May 29.

Those shares were trading at $24.60, down from opening levels of $24.72.

Called issues busy

A market source noted that a couple of the day’s most actively traded – and listed – securities were issues that had been called.

ING Group NV’s 7.375% perpetual hybrid capital securities (NYSE: IDG) were one such issue. The source said the call had been announced for July 15.

The notes closed at $25.46, off 42 cents, or 1.62%.

Meanwhile, MetLife Inc.’s 6.5% series B noncumulative preferreds (NYSE: METPB) remained on the busy side ahead of its June 26 call date.

Paper continued to hold steady at $25.04.

The New York-based insurance company will pay par plus accrued and unpaid dividends on the shares to holders who validly tender their holdings. On Friday, the company amended the offer to include only 59.85 million of the preferreds, versus the original offer for all 60 million shares.

The amendment was a move that would allow the preferreds to continue trading on the NYSE after the tender.

However, for those who don’t participate in the tender – or who can’t participate in full due to the limited amount be taken in – MetLife will call the issue in its entirety on July 1.

The call price is par.

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