Geopolitical concerns mount, but preferreds gain ground; Paragon notes lag behind par

By Stephanie N. Rotondo

Phoenix, Aug. 6 – Preferred stocks were higher Tuesday, though a trader said the market’s movements were largely geopolitical and not based on anything necessarily specific to the market.

For instance, the trader noted that Treasuries were rallying as new data suggested Italy is in a recession and the U.S. trade deficit unexpectedly shrunk. He also mentioned that NATO was forecasting a Ukrainian incursion from the Russians.

“We’re getting a ton of mixed signals,” he said in regards to the economy’s overall health.

Another market source said the market “rebounded a little bit in the late morning,” after opening slightly soft.

He noted that overall volume was on the light side.

The Wells Fargo Hybrid and Preferred Securities index closed up 17 basis points.

In recent deals, Paragon Shipping Inc.’s $25 million of 8.375% $25-par senior notes due 2021 were seen offered at $24.65 early in the session.

After the market close, another source said he hadn’t seen much going on in the deal, given its small size.

“It’s probably high risk too,” he said.

The deal priced Tuesday, in line with talk.

Deutsche Bank Securities Inc. and Jefferies & Co. were the joint bookrunners.

The Athens, Greece-based drybulk shipping company plans to use the proceeds to pay down debt.

Banks mixed in trading

Wells Fargo & Co. was an active name in the preferred space in an otherwise lackluster day.

The 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) saw over 641,000 shares change hands, rising 22 cents to $25.72. The 6% series T class A noncumulative preferreds (NYSE: WFCPT) were exchanged nearly 500,000 times, ending the day up 6 cents at $24.46.

Also active among paying securities was the Goldman Sachs Group Inc.’s 5.5% series J fixed-to-floating rate noncumulative preferreds (NYSE: GSPJ), which finished the day off 13 cents at $23.62.

Another U.S. financial name, JPMorgan Chase & Co., was among the day’s most actively traded issues. The 6.3% series W noncumulative preferreds (NYSE: JPMPE) fell 7 cents to $25.54.

Meanwhile, Southern California Edison Co.’s 5.75% fixed-to-floating rate cumulative trust preference securities (NYSE: SCEPH) ended the session down 4 cents at $25.61.

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