Preferreds gain amid limited liquidity; bank earnings eyed; Hercules offers $25-par notes

By Stephanie N. Rotondo

Phoenix, July 8 – The preferred stock market was firming up in Tuesday trading.

The Wells Fargo Hybrid and Preferred Securities index closed up 14 basis points. The index was up 11 bps at mid-morning.

Still, overall activity remained on the subdued side as investors geared up for upcoming bank earnings.

“Volume did kind of fall off,” a market source said. Even though the market was higher on the day, he added that “I’m sure we dramatically lagged Treasuries, since they were up so much.”

The source also remarked that a couple of bid-wanted lists were circulating.

One trader noted that corporate quarterly earnings were also slated to start soon and that those figures would give an indication of how the economy was faring.

“Interest rates will have to go up sometime,” he said.

Hercules Technology Growth Capital Inc. announced a $50 million offering of $25-par “baby bonds” due 2024 on Tuesday, the day’s only domestic new issue.

But because of the deal’s small size, sources had not seen any gray markets for the notes.

The new issue will have a $7.5 million over-allotment option. Keefe Bruyette & Woods Inc., Jefferies and RBC Capital Markets are leading the deal.

The Palo Alto, Calif.-based specialty finance company will use the proceeds for investments related to its investment strategies and for general corporate purposes.

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