Preferreds initially trend lower in sympathy with equities, then recover; Morgan Stanley trades off

By Stephanie N. Rotondo

Seattle, Jan. 30 – The preferred stock market ended slightly positive on Monday, though it did open the session with a weaker tone – though not as weak as its common stock counterpart.

“Nothing is moving a ton except for equities,” one trader said.

Another market source said the swing from negative to positive “wasn’t really a lot.”

“Most of the swing was within an eighth of a point,” he said. “Not really a lot in the big picture of volatility.”

The source also commented that it was “hard to say that there was anything driving” the moves. He pointed out that there was some fresh economic data out early in the day that might have played a small role.

The Wells Fargo Hybrid and Preferred Securities index closed up 6 basis points, though it was down 13 bps earlier. The Dow Jones industrial average declined over 122 points, falling under the historic 20,000-mark that it reached last week.

Even Morgan Stanley & Co. Inc.’s $1 billion of 5.85% series K fixed-to-floating rate noncumulative preferreds – a benchmark deal that priced on Tuesday – was “not doing too much,” according to a trader.

He said the paper was being quoted wide at $25.05 bid, $25.30 offered.

Another source pegged the paper at $25.22, which he said was off 3 cents on the day.

The issue is trading under a temporary symbol, “MSDDP.”

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