Preferreds gain, led by banks, oil, gas; Citigroup active; Bluerock, Targa get little love

By Christine Van Dusen

Atlanta, Oct. 22 – Preferred stocks finished the session higher on light volume, with oil and natural gas companies leading the way, on an otherwise fairly quiet Thursday for the market.

“The market ended up about 19 basis points, so about four or five cents,” a market source said.

Among the most active issues was Citigroup Inc.’s 7.875% fixed-to-floating rate trust preferred securities, series N (C.PRN), which closed up 5 cents at $25.01 on about 1.17 million shares traded.

Southern Co.'s 6.25% notes series 2015A finished the day up 13 cents at $25.93 on about 311,680 shares traded.

And EPR Properties’ 6.625% series F cumulative redeemable preferred shares closed on Thursday at $24.87, down 5 cents on 295,693 shares traded.

Recent issues saw little action, with Bluerock Residential Growth REIT Inc.'s new preferreds – $62.5 million 8.25% series A cumulative redeemable perpetuals that priced last week at $25.00 per share – trading at $25.30 on just 600 shares traded, a trader said.

On Wednesday the preferreds were quoted between $25.10 and $25.30.

Wunderlich Securities Inc. and Compass Point were the joint bookrunning managers. DA Davidson & Co. and Janney Montgomery Scott LLC were co-lead managers.

Houston-based Targa Resources Partners LP's 9% fixed-to-floating rate cumulative redeemable preferred units – now listed as "NGLS.PA" – traded Thursday morning at $24.77, then closed at $24.94, down 3 cents on 53,453 shares traded.

An additional $15 million of the units were sold last week via Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC. Added to the $110 million initially sold on Oct. 7, total issuance comes to $125 million.

The over-allotment option allowed for up to $16.5 million additional units to be sold.

Fannie, Freddie end lower

Preferreds from Fannie Mae and Freddie Mac didn't move all that much on Thursday, following the recent news that the White House had declined to release the mortgage companies from government control.

“They took a little dinger yesterday, but overall today there’s a lack of volume, and everything’s pretty flat,” a trader said on Thursday morning.

By the afternoon, Fannie and Freddie were dipping. Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) closed Thursday at $4.74, down 7 cents on 847,067 shares traded.

The 8.25% series T noncumulative preferreds (OTCBB: FNMAT) closed Thursday at $6.95, down a penny on 32,233 shares traded.

And Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) closed Thursday at $4.80, down 5 cents.

Banks, meanwhile, “firmed up a hair,” the trader said. “But there's nothing I saw in any earnings reports that indicates they'd be raising new capital or calling in some of the older preferreds.”

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