Holiday weighs on market liquidity; Southern notes firm; Magnum Hunter nosedives as advisors hired

By Stephanie N. Rotondo

Phoenix, Oct. 12 – The preferred stock market was higher in Monday trading, though activity was subdued given the Columbus Day holiday.

“Everyone is asleep today,” a trader said.

Still, the markets overall were on the firm side as several Federal Reserve policymakers said a 2015 interest rate increase remained in the cards.

The Wells Fargo Hybrid and Preferred Securities Index improved by 17 basis points.

Given the firm tone, Southern Co.’s $1 billion of 6.25% $25-par series 2015A junior subordinated notes due 2075 (NYSE: SOJA) “traded up to $25.30,” according to a trader.

The notes finished the day at $25.32, a gain of 3 cents.

Meanwhile, Magnum Hunter Resources Corp. bucked the positive trend of the day. The Irving, Texas-based oil and gas company announced late Friday that it had hired advisors to explore its strategic options. As part of that effort, the company also elected to suspend the dividend on its preferred shares.

“So those all got rocked down from $6 to $3,” a trader said.

The 8% series D cumulative preferreds (NYSE: MHRPD) dropped $4.93, or 51.46%, to $4.65. The 10.25% series C cumulative preferreds (NYSE: MHRPC) were off $2.93, or 45.38%, at $3.52.

PJT Capital LP is acting as financial advisors. Kirkland & Ellis LLP is acting as legal advisor.

While the dividends are suspended, they will accumulate until the company pays the amount in full. Additionally, nixing the monthly payment will not impact the company’s revolving credit facility or its other debt agreements.

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