Morning Commentary: Preferreds trade up; Scorpio Tankers offers notes; Global Indemnity drops

By Stephanie N. Rotondo

Seattle, March 28 – The preferred stock market was on the rise early Tuesday.

The Wells Fargo Hybrid and Preferred Securities index was up 10 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was up 3 bps.

The primary had a new deal added to the calendar, an offering of $25-par senior notes due 2019 from Scorpio Tankers Inc.

Price talk on the deal – led by Stifel Nicolaus & Co. Inc. and Janney Montgomery Scott LLC – was 8.25%, according to a market source.

Proceeds from the “baby bond” sale will be used to fund a cash tender offer for the 7.5% $25-par notes (NYSE: SBNB) coming due in October.

Those notes were trading off 13 cents to $25.47 in early dealings.

The tender will expire on April 11. Participating holders will receive par plus accrued interest.

One trader remarked that it was “kind of odd” to take out the $50 million issue early.

“I wouldn’t touch that one,” he added.

Among recent issues, Global Indemnity Ltd.’s 7.875% $25-par subordinated notes due 2047 – a deal priced March 16 – were coming in after the company said $10 million of its $18 million greenshoe had been exercised, lifting the total amount outstanding to $130 million.

A trader pegged the paper around $24.70. A day earlier, the notes had been trading closer to $24.90.

The new issue is expected to list on the Nasdaq Global Select Market later this week. The expected ticker symbol is “GBLIL.”

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