Morning Commentary: Medley Capital to sell $25-par notes; THL Credit prices; Fannie, Freddie active

By Stephanie N. Rotondo

Seattle, Dec. 10 – The preferred stock market was attempting to move up in early Thursday trading.

The Wells Fargo Hybrid and Preferred Securities index was up 1 basis point at mid-morning.

The primary saw a new deal from Medley Capital Corp. added to the calendar. The business development company said it is planning to sell $25-par notes due 2021, with proceeds going toward paying down debt.

In fact, the company intends to use the funds to redeem its $40 million of 7.125% $25-par senior notes due 2019 (NYSE: MCQ), according to a trader.

The 7.125% notes “go ex-dividend tomorrow, so it is probably a good buy,” the trader said.

Those notes were up a penny at mid-morning, trading at $25.36.

Medley’s proposed offering comes on the heels of another deal from a business development company. THL Credit Inc. sold $30.5 million of 6.75% $25-par notes due 2022, according to a press release out early Thursday.

That company also plans to use proceeds to pay down debt.

In the secondary, Fannie Mae and Freddie Mac preferreds were already dominating trading as of mid-morning. But the paper was mixed and there was no fresh news to act as a catalyst.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were off 4 cents, or 1.06%, at $3.74, while Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were up 2 cents at $3.75. Both issues had seen trading of over 1 million shares early in the session.

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