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Preferred stocks modestly better; Saratoga up; Morgan Stanley gyrates in wake of SEC fine
By Stephanie N. Rotondo
Seattle, Dec. 20 – The preferred stock market continued to edge higher on Tuesday, though market sources added once again that volume was subdued.
“There’s not a lot of tax-loss selling,” a trader said, as investors prepare for the end of the year. “A lot of things are going ex-dividend over the next two weeks that could cause some things to move around a little bit.”
Mostly, however, the trader believed that “it’s going to be dead” going into Christmas and year-end.
The Wells Fargo Hybrid and Preferred Securities index improved 11 basis points for the day. The index firmed 37 bps on Monday.
Saratoga Investment Corp.’s $65 million of 6.75% $25-par notes due 2023 were seen at $24.80 bid, $24.90 offered in early dealings.
That compared to a $24.75 to $24.85 context at mid-morning on Monday.
The deal priced Dec. 14, in line with the 6.75% price talk.
A source noted that the deal is expected to list on the New York Stock Exchange soon under the ticker symbol “SAB.”
Meanwhile, Morgan Stanley & Co. Inc.’s 7.125% series E fixed-to-floating rate noncumulative preferreds (NYSE: MSPrE) were initially lower, trading off 2 cents to $28.19. However, the paper came back to end up 7 cents at $28.28.
In early trading, the issue was among the most active securities. By the bell, activity in the paper had fallen well behind.
The moves in the preferreds came as it was announced that the New York-based investment bank had been fined $7.5 million by the Securities and Exchange Commission over alleged violations of customer protection rules.
Morgan Stanley did not admit or deny any wrongdoing.
Of the day’s most active names, the award went to Fannie Mae and Freddie Mac preferreds.
However, neither issue got above 1 million shares exchanged.
Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) declined 15 cents, or 1.85%, to $7.96. But Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) rose a dime, or 1.32%, to $7.65.
There was no fresh news out on the GSEs to act as a catalyst.
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