Preferreds firm in midweek trading; Medley deal delayed; GSEs active but finish mixed

By Stephanie N. Rotondo

Seattle, Jan. 11 – The preferred stock market ended with a positive tone on Wednesday.

The Wells Fargo Hybrid and Preferred Securities index rose 62 basis points. The iShares U.S. Preferred Stock index was 49 bps higher.

A trader said Medley LLC’s planned sale of $25-par notes due 2024 was expected to price on Wednesday but that the new issue was postponed to at least Thursday.

“Someone said they rushed a document through the [Securities and Exchange Commission] and there was some sort of waiting period,” the trader said. The trader also noted that once the market learned of the deal, its 6.875% $25-par notes due 2026 (NYSE: MDLX) got hammered.

Because of the weakness in the secondary piece, the trader said there was talk the company might have to make the terms of the planned deal more attractive.

On Monday, ahead of any word of the new issue, the notes ended at $24.25. At Tuesday’s close – and once the offering had become news – the paper was at $23.55.

But Wednesday trading saw the paper edging back up 54 cents, or 2.29%, to $24.09.

Elsewhere in the secondary, GSE-linked preferreds continued to dominate.

Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were steady at $8.10, while Freddie Mac’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) fell a nickel to $7.63.

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