Morning Commentary: Preferred stock market mixed post-Fed; Validus remains busy but declines

By Stephanie N. Rotondo

Seattle, June 15 – Preferred stocks were on the mixed side early Thursday, just one day after the Federal Reserve announced an interest rate increase.

The Wells Fargo Hybrid and Preferred Securities index was off 3 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was up 12 bps.

Following its two-day policy meeting, the Fed’s Federal Open Market Committee said it was increasing benchmark interest rates to 1% to 1.25% from 0.75% to 1%. The increase was the second to occur in the last six months, and the committee projected that another rate hike will happen before the year is out.

Among recently priced but still not listed issues, Validus Holdings Ltd.’s $250 million of 5.8% series B noncumulative preference shares continued to top the charts in terms of volume. However, the issue was softer in early dealings, falling 9 cents to $25.18.

The deal came on Monday, upsized from $150 million and tight to the 5.875% price talk. It freed to trade on Tuesday and was assigned a temporary ticker symbol, “VRRHP.”

NGL Energy Partners LP’s $185 million of 9% class B fixed-to-floating rate cumulative redeemable preferreds were also a little lower, slipping a penny to $24.80.

That issue priced June 6 and is trading under a temporary symbol, “NGGLP.”

As for Maiden Holdings Ltd.’s $150 million of 6.7% series D noncumulative preference shares, they bucked the downward trend, rising 11 cents to $25.35.

The deal came June 8, upsized from $100 million and tight to the 6.75% price talk. It is trading under a temporary symbol, “MDNHF.”

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