Preferreds rally after midweek losses; Morgan Stanley still in focus; Just Energy on tap

By Stephanie N. Rotondo

Seattle, Jan. 26 – After losing ground in the previous session, preferred stocks were rebounding on Thursday.

The Wells Fargo Hybrid and Preferred Securities index finished the day up 40 basis points. The index was up 6 bps at mid-morning.

The U.S. iShares Preferred Stock index was meantime up 42 bps.

Morgan Stanley & Co. Inc.’s $1 billion of 5.85% series K fixed-to-floating rate noncumulative preferreds – a benchmark deal priced Tuesday – continued to be eyed, with a market source placing the issue at $25.23 at the close.

That was unchanged from the previous day.

Earlier in the day, a trader saw the issue trading “around $25.30.”

The 6.375% series I fixed-to-floating rate noncumulative preferreds (NYSE: MSPrI) were meantime steady at $26.29.

Morgan Stanley & Co. LLC was the bookrunner.

The dividend will be fixed until April 15, 2027, at which point it will be based on Libor plus 349.1 bps.

Meanwhile, a trader noted that Just Energy Group Inc. was entering the market. In a press release out Thursday, the Toronto-based energy provider said it was selling series A fixed-to-floating rate cumulative redeemable preferred stock in the United States.

The trader said he had not yet heard any price talk on the new issue. Another market source said the deal had not priced by day’s end.

In addition to the public offering, Just Energy is also planning to sell up to $10 million of the new series of preferreds to company insiders via a non-brokered private placement.

More gains for GSEs

GSE preferreds once again topped the charts, though without any fresh news to act as a catalyst.

Fannie Mae and Freddie Mac paper continued to edge higher in Thursday trading.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) rose 33 cents, or 3.86%, to $8.88, while the variable-rate series O noncumulative preferreds (OTCBB: FNMFN) improved 51 cents, or 3.7%, to $14.31.

Freddie’s 8.375% fixed-to-floating noncumulative preferreds (OTCBB: FMCKJ) ended 47 cents, or 5.88%, better at $8.47.

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