Morning Commentary: End-of-month session quiet but still firm; August’s new issues remain busy

By Stephanie N. Rotondo

Seattle, Aug. 31 – The preferred stock market was again trending higher, albeit amid limited liquidity in midweek trading.

Instead, market players were focused on end-of-the-month activities, especially given that nearly $5 billion in preferred securities had been redeemed during August.

Morgan Stanley & Co. Inc. and Bank of America Corp. made up the bulk of those redemptions, with the former taking out $2.83 billion in three series of capital securities and the latter redeeming $1.97 billion in trust preferred securities.

Additionally, Barclays Bank plc is gearing up to redeem $750 million of 6.625% preference shares on Sept. 15.

As previously reported, the preferred market is expecting September’s new issue calendar to be quite full.

The Wells Fargo Hybrid and Preferred Securities index was up 7 basis points at mid-morning.

In early trading, investors continued to push up recent deals from Qwest Corp., Legg Mason Global Asset Management and Entergy Louisiana LLC.

Qwest’s $977.5 million of 6.5% $25-par notes due 2026 (NYSE: CTBB) – consisting of $850 million sold on Aug. 11 and a fully exercised greenshoe of $127.5 million – were ticking up 3 cents to $25.92 at mid-morning. Legg Mason‘s $500 million of 5.45% $25-par junior subordinated notes due Sept. 15, 2056 (NYSE: LMHB) – priced Aug. 3 – were meantime 2 cents better at $25.17.

Entergy Louisiana’s $270 million of 4.875% $25-par collateral trust mortgage bonds due 2066 (NYSE: ELC) were also slowly moving up closer to par, rising a penny to $24.978.

That issue came Aug. 10.

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