Preferreds ‘up big’ as Fed revises interest rate policy; AmTrust trades over par; oil up

By Stephanie N. Rotondo

Phoenix, March 18 – Preferred stocks were “up big” on Wednesday following the Federal Reserve’s latest policy announcement, a market source reported.

The Wells Fargo Hybrid and Preferred Securities index was up 35 basis points at the end of business, or 8 cents to 9 cents on average for $25-par issues.

However, trading volume remained constrained, the source said. There was some uptick in liquidity after the announcement but not as much as expected, he noted.

Upon the conclusion of its two-day policy meeting, the Fed opted to take out the word “patient” in terms of when it plans to raise interest rates.

The wording change caused many to speculate that a rate hike could take place as early as June. However, as the central bank noted that economic data – unemployment in particular – had room for improvement, others felt the hike would not occur until September.

Meanwhile, no new deals were added to the pipeline, though now that the Fed has given its latest policy revisions, that could change.

“I’d probably expect [the calendar] to become active tomorrow or next week,” the source said.

Among recently priced issues, AmTrust Financial Services Inc.’s $165 million of 7.5% $25-par series D noncumulative preferreds were pegged at $24.90 bid, par offered at mid-morning.

The issue finished at $25.02, up 7 cents on the day.

Meanwhile, oil prices were weak in early trading but rebounded after the Fed’s policy changes were made public.

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