TriState on tap; Apollo Global, QTS Realty hit par; several recent deals ‘under water’

By Abigail W. Adams

Portland, Me., March 14 – Trading volume remained light in the preferreds space on Wednesday, which market sources pointed to as a factor for several outstanding issuances trading at a discount.

“A lot of stuff is getting beaten up because there’s no volume,” a market source said. “I hope that will change once we settle in with rates.”

The uncertainty surrounding the Federal Reserve rate increases has affected the buying conditions in the preferreds space, the source said.

While overall volume remained low, Apollo Global Management LLC’s recently priced 6.375% $25-par perpetual preferred shares continued to see high-volume trading during their second full trading session after pricing on Monday. The preferreds closed Wednesday at par.

QTS Realty Trust Inc.’s recently priced 7.125% series A cumulative redeemable perpetual preferred stock also closed Wednesday at par. It was the first time the preferreds have traded up to their liquidation preference since pricing on March 8.

While Apollo and QTS Realty closed Wednesday at par, several other recent deals and outstanding issuances remain “significantly under water,” a market source said.

Compass Diversified Holdings LLC’s 7.875% series B fixed-to-floating rate cumulative preferred shares were pointed to as a recent deal that “got beaten up.” The 7.875% preferreds were seen at $24.25 offer but no bid on Wednesday.

Cedar Realty Trust Inc.’s 6.5% series C cumulative redeemable preferred stock was also significantly below water after pricing an add-on in mid-December. The trading prices of the preferreds is so low they almost have the same yield as Cedar Realty’s 7.25% series B cumulative preferred stock, a market source said.

While the performance of recent deals has been mixed, TriState Capital Holdings, Inc.’s offering of $35 million of perpetual fixed-to-floating rate series A non-cumulative preferred stock is expected to price on Thursday.

Up to par

Apollo’s 6.375% preferred shares once again traded up to their issue price of $25.00 early in Wednesday’s session after closing Tuesday at $24.91. The new preferred shares freed for OTC market business under the ticker “APGGP.”

The preferreds ricocheted between just above and just below par on Tuesday. While not as active as on Tuesday, Apollo’s preferreds continued to see high-volume trading with 631,000 shares in play during Wednesday’s session.

Nearly 4.77 million shares were in play on Tuesday. Apollo received an investment-grade rating of BBB+ from S&P Global Ratings.

QTS Realty’s 7.125% series A preferreds also traded up to par on Wednesday for the first time since pricing on March 8. The preferreds closed the session at $25.00, an increase of 13 cents or 0.85%.

Before pricing, the preferreds were seen down in the gray market.

Below par

While recent deals from Apollo and QTS Realty traded up to par on Wednesday, other recent deals were still trading well below.

While closing the day up, Compass Diversified Holdings’ 7.875% preferreds were still below their issue price. The preferreds closed Wednesday at $24.22, an increase of 2 cents or 0.21%. There was an offer of $24.25 for the preferreds but no bids.

“I think they’ll get worse,” the source said.

Compass priced $100 million of the preferreds on March 6.

Cedar Realty’s 6.5% series C preferreds are trading with such a discount they almost have the same yield as the Port Washington, N.Y.-based real estate investment trust’s 7.25% series B preferreds, a market source said.

The 6.5% preferreds closed Wednesday at $21.75, flush with Tuesday’s close. Cedar priced a $50 million add-on to the preferreds in mid-December. “Every day there’s more sell pressure,” the source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.