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Morning Commentary: Preferreds open lower; TICC talked at 6.5% area; AmTrust improves
By Stephanie N. Rotondo
Seattle, April 4 – After adding a sizable amount on Monday, the preferred stock market was giving back a little in early Tuesday trading.
The Wells Fargo Hybrid and Preferred Securities index was off 1 basis point at mid-morning. The U.S. iShares Preferred Stock ETF was down 13 bps.
Price talk on TICC Capital Corp.’s proposed $50 million offering of $25-par notes due 2024 was released early in the session. The deal is expected to price after Wednesday’s close in the 6.5% area, according to a market source.
Ladenburg Thalmann & Co. Inc., BB&T Capital Markets, Compass Point and William Blair & Co. are running the books.
Meanwhile, a trader said AmTrust Financial Services Inc.’s preferreds were “snapping back nicely” after the company issued a restatement of earnings for 2014 and 2015.
The preferreds were up 3% to 5% in early dealings.
The company also reported its 2016 results.
The restatements resulted in a 7.2% reduction in net income for 2014 and a downward move of 11.2% in 2015.
Still, the trader noted that AmTrust “doesn’t have that overhang” anymore, thus the preferreds were pushing higher.
GSEs continued to dominate trading, however. Fannie Mae and Freddie Mac paper continued to weaken, as investors remained concerned about how potential corporate tax changes could negatively impact the agencies.
Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were off 23 cents, or 3.69% at $6.00. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were down 16 cents, or 2.68%, at $5.80.
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