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Morning Commentary: Preferred stocks remain weak; Two Harbors not yet free; Spark plans deal
By Stephanie N. Rotondo
Seattle, March 8 – The preferred stock market continued to sell off in early midweek trading.
A trader speculated that investors were sitting back, “trying to see what is cheap.”
The Wells Fargo Hybrid and Preferred Securities index was down 38 basis points at mid-morning. The U.S. iShares Preferred Stock index was down 50 bps.
Two Harbors Investment Corp.’s $125 million of 8.125% series A fixed-to-floating rate cumulative redeemable preferreds – a deal priced Tuesday – were not yet free to trade, a market source reported.
The source said the issue was expected to free from the syndicate on Thursday.
A trader pegged the paper at $24.52 bid, $24.60 offered.
The deal came upsized from $75 million and tight to the 8.125% to 8.25% price talk.
Morgan Stanley & Co. LLC, UBS Securities LLC and Keefe Bruyette & Woods Inc. ran the books.
Come early Wednesday, Spark Energy Inc. added another deal to the pipeline.
The Houston-based energy provider said it was selling $30 million of series A fixed-to-floating rate cumulative redeemable preferreds, with price talk in the 8.75% area.
RBC Capital Markets LLC and FBC Capital & Co. are the bookrunners.
As for other recent issues, Apollo Global Management LLC’s 6.375% series A preferreds listed on the New York Stock Exchange under the ticker symbol “APOPrA.”
A trader saw that paper offered at $24.85.
Apollo brought the $250 million deal on Feb. 28. On Tuesday, the company said that $25 million of its $37.5 million over-allotment option had been exercised, lifting the total amount outstanding to $275 million.
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