Preferred stocks gain ahead of Fed decision; KeyCorp stays busy, firms; Saratoga eyed

By Stephanie N. Rotondo

Seattle, Dec. 13 – The preferred stock market was gaining ground on Tuesday as investors waited to see if the Federal Reserve would in fact raise interest rates.

The Wells Fargo Hybrid and Preferred Securities index firmed 7 basis points. The index was up 21 bps at mid-morning.

The central bank began its two-day policy meeting on Tuesday, with a statement expected to come Wednesday afternoon. It is widely anticipated that the Fed will in fact raise interest rates.

While the market was performing better, overall activity was on the muted side, according to a trader.

“It’s pretty quiet,” he said. “A lot of things went ex-dividend today.”

KeyCorp’s $500 million of 6.125% series E fixed-to-floating rate noncumulative perpetual preferred stock – a deal priced Dec. 5 – rose 13 cents to $25.45.

At mid-morning, the issue was holding in a $25.33 to $25.40 range, a trader reported.

A market source said the issue would begin trading on the New York Stock Exchange under the ticker symbol “KEYPI” on Thursday.

Currently, the paper is trading under a temporary symbol, “KYYPP.”

As for this week’s new deals, a trader said Saratoga Investment Corp.’s planned $55 million offering of $25-par seven-year notes could be pricing later in the day.

However, details were not available as of press time.

Ladenburg Thalmann & Co. Inc., BB&T Capital Markets, Compass Point and William Blair & Co. are running the books.

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