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Morning Commentary: Preferreds firm ahead of Yellen speech; Torchmark plans $25-par notes offering
By Stephanie N. Rotondo
Seattle, March 29 – Preferred stocks continued to trend higher in early Tuesday trading, as the market awaited a speech from Janet Yellen, Federal Reserve chairman, later in the day.
Yellen’s lunchtime speech in New York could give a clue as to how interest rate increases will play out this year.
A trader also noted that the most recent report from the S&P/Case-Shiller Index was “a good sign for the markets.” The report indicated that home prices increased 5.7% in January.
The Wells Fargo Hybrid and Preferred Securities index was up 8 basis points at mid-morning.
A new deal was added to the calendar on Tuesday, as Torchmark Corp. announced plans to sell a minimum of $150 million of $25-par junior subordinated debentures due 2056.
Price talk is around 6.25%, according to a market source.
A trader saw the issue at $24.75 bid in the early gray market.
BofA Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are running the books.
The McKinney, Texas-based insurance holding company said it plans to use the funds to redeem its outstanding $250 million of 6.375% senior notes due June 15.
On the heels of the new deal, Torchmark’s 5.875% $25-par junior subordinated debentures due 2052 (NYSE: TMKPB) were off 15 cents at $25.25.
Meanwhile, the Gabelli Equity Trust Inc.’s $80 million of 5.45% series J cumulative redeemable preferreds – a deal priced Monday – had not yet freed to trade as of mid-morning, a trader said.
He quoted the issue at $24.95 bid, par offered.
UBS Securities LLC and Wells Fargo Securities were the joint bookrunners.
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