Preferreds rise but off from highs; Stifel comes upsized, at revised talk; Bluerock eyed

By Stephanie N. Rotondo

Seattle, July 11 – The preferred stock market opened the week with a firm tone on Monday as the broader markets ran up.

The S&P 500 index, for its part, hit an all-time high, overtaking its previous record from May 2015.

The Wells Fargo Hybrid and Preferred Securities index closed up 6 basis points. The index was up 12 bps in early trading.

With the generally positive feel came two new issues: An offering of series A noncumulative preferreds from Stifel Financial Corp. and a sale of series C cumulative redeemable preferreds from Bluerock Residential Growth REIT Inc.

“They are both doing well,” a trader said ahead of pricing. He placed Stifel’s new issue at $24.90 bid, par offered in the early gray market. He had not yet seen any markets for Bluerock but noted that he believed it was “going to sell out too.”

There was no selling group on the Stifel deal, according to the trader, and price talk was 6.5% to 6.625%. That was later revised to 6.25%, the level at which the deal priced.

The company sold $150 million of the new preferreds, up from an expected $75 million.

Just prior to pricing, the paper was pegged at par bid, $25.05 offered. Post-pricing, the issue ran up to $25.15 bid, $25.25 offered, according to a market source.

Meanwhile, Bluerock was being talked in a 7.75% area, though that came in to 7.625% by the end of the day, a trader said. Pricing is expected early Tuesday.

Toward the end of the day, the Bluerock issue was seen at par bid, $25.05 offered.

Keefe Bruyette & Woods Inc., BofA Merrill Lynch and Morgan Stanley & Co. LLC are leading the Stifel deal. Janney Montgomery Scott LLC, D.A. Davidson & Co. and FBR Capital Markets are handling the Bluerock offering.

In the wake of the new issue announcements, Stifel’s 5.375% $25-par senior notes due 2022 (NYSE: SFN) were trading down 58 cents, or 2.24%, to $25.35. Bluerock’s 8.255% series A cumulative redeemable preferreds (NYSE: BRGPA) were off 13 cents at $26.08 at mid-morning but recovered some ground, ending down just 8 cents at $26.13.

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