AmTrust gets temporary symbol, trades higher; new $1,000-par bank issues trade around par

By Stephanie N. Rotondo

Phoenix, March 16 – The preferred stock market was firm in Monday trading, helping a new issue from AmTrust Financial Services Inc. gain traction.

The Wells Fargo Hybrid and Preferred Securities index closed up 8 basis points after being up 10 bps at mid-morning.

Though the space ended with a positive tone, a market source remarked that the arena “underperformed Treasuries.”

The $165 million offering of 7.5% $25-par series D noncumulative preferreds – priced Thursday and freed early Friday – were seen jumping about 20 cents in early trades to a $24.80 to $24.85 context.

The issue continued to move up throughout the session, ending 25 cents higher at $24.95.

A trader also noted that the new issue was assigned a temporary trading symbol, “AMSVP.”

Among other recent deals in the $1,000-par space, Citigroup Inc.’s $1.5 billion of 5.875% series O fixed-to-floating rate noncumulative preferreds – a deal from Friday – were trading “right around par,” according to a trader.

Another market source saw the preferreds finishing at 100.125.

Bank of America Corp.’s ’s $1.9 billion offering of 6.1% $1,000-par series AA fixed-to-floating rate noncumulative preferred stock were placed at 100.125 early in the day, going on to close with a 101 handle. Morgan Stanley & Co. Inc.’s $1.5 billion of 5.5% series J fixed-to-floating rate noncumulative preferreds also closed with in a 101 context, after trading at 100.5 early in the session.

Both BofA and Morgan Stanley came Thursday.

As for the coming pipeline, a trader said he had not seen any new deals early Monday but said that he “assumes we will probably get another deal coming tomorrow.”

Additionally, a source said the lack of liquidity on Monday could have been due to investors – particularly on the institutional side – waiting to see what the pipeline will bring.

Vanguard weakens

Vanguard Natural Resources LLC said late Friday that it had entered into an equity distribution agreement to sell up to $50 million of its 7.875% series A cumulative redeemable perpetual preferred units (Nasdaq: VNRAP), up to $100 million of its 7.625% series B cumulative redeemable perpetual preferred units (Nasdaq: VNRBP) and up to $75 million of its 7.75% series C cumulative redeemable perpetual preferred units (Nasdaq: VNRCP).

Additionally, the company will also sell up to $400 million of its common units (Nasdaq: VNP).

Credit Suisse Securities (USA) LLC, UBS Securities LLC, BMO Capital Markets, BB&T Capital Markets, SunTrust Robinson Humphrey Inc. and MLV & Co. LLC are the sales agents.

“I like what I see,” a trader said, noting that the “at-the-market” offering was a “great idea.”

“If they can bring preferreds at comp market levels, that’s cheaper than bringing common at this point,” the trader said.

He also noted that the preferreds were currently trading “rich” compared to senior debt and that he “would be a seller at this point.”

Following Friday’s announcement, the oil and gas company’s preferred units were trading off.

The series As were off 76 cents, or 3.27%, at $22.51, while the Bs came in $1.07, or 5.07%, to $20.04.

The Cs meantime dropped 78 cents, or 3.49%, to $21.54.

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