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.”

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.

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.

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.

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