Midday Commentary: Rate fears driving preferreds down; Goodrich to price new cumulative issue

By Stephanie N. Rotondo

Phoenix, Aug. 14 - Preferred stocks were "getting hit again," a trader said Wednesday.

The market has been on the soft side for several weeks now, he remarked, adding that "sooner or later" it should reverse course.

"Preferred spreads have widened out considerably," he said, as fears of rising interest rates have plagued the market. With spreads at their widest point since 2011, he opined that the resulting sell-off "seems overdone."

"There's a real lack of liquidity," he said. "The only direction is down as bids get tapped."

The day did see one new issue hitting the tape as Goodrich Petroleum Corp. said it was selling series D cumulative perpetual preferreds.

Price talk is around 9.75%, according to a trader.

The trader saw the issue at $24.60 bid in the midday gray market.

Morgan Stanley & Co. LLC and UBS Securities LLC are the joint bookrunning managers. Janney Montgomery Scott LLC, J.P. Morgan Securities LLC, MLV & Co. LLC and Sterne Agee & Leach Inc. are the joint lead managers.

The new issue was meantime putting pressure on the company's 10% series C cumulative preferreds (NYSE: GDPPC), which were down 70 cents, or 2.62%, at midday, trading at $26.00.

In other recent issues, Integrys Energy Group Inc.'s $400 million of 6% fixed-to-floating rate junior subordinated notes due 2073 were "just hanging around" $24.52 bid, $24.55 offered.

The paper had closed Tuesday around par. The issue priced Monday and freed to trade on Tuesday.

© 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.