Morning Commentary: Preferreds edge up; one ‘decent’ deal expected; Medley announces add-on

By Stephanie N. Rotondo

Seattle, Feb. 13 – Preferred stocks were starting the week with a positive tone, according to early Monday dealings.

The Wells Fargo Hybrid and Preferred Securities index was up 6 basis points at mid-morning. The U.S. iShares Preferred Stock index was meantime up 8 bps.

A trader said that “we are hearing at least one decent deal this week.” According to the buzz, the issue could come as early as Tuesday.

The trader was not sure who was doing the deal, but said it “sounded like” it could be a utility, a bank or an insurance company.

The primary did see one new issue hit the tape, albeit a small one. Medley LLC said it planned to sell up to $28.75 million – including a $3.75 million greenshoe – of its 7.25% $25-par notes due 2024 (NYSE: MDLQ) via an add-on offering.

The company initially sold $30 million of the notes on Jan. 13. A $4.5 million greenshoe was then exercised, bringing the total amount outstanding to $34.5 million.

FBR Capital Markets is running the books.

In the wake of the announcement, the existing paper declined 25 cents to $25.40.

As for the rest of the secondary, there continued to be action in GSE-linked preferreds. Morgan Stanley & Co. Inc.’s 5.85% series K fixed-to-floating rate noncumulative preferreds were also on the busier side.

In both cases, the issues were gaining ground.

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