Preferred stocks under pressure; Two Harbors frees to trade; Spark fades post-pricing

By Stephanie N. Rotondo

Seattle, March 9 – Preferred stocks continued their losing streak on Thursday.

“Everything is getting hit with the bond market off,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index declined 64 basis points, as the U.S. iShares Preferred Stock index slipped 51 bps.

The pervasive weakness wasn’t doing much to help recently priced deals, either.

Two Harbors Investment Corp.’s $125 million of 8.125% series A fixed-to-floating rate cumulative redeemable preferreds freed to trade early in the session, according to a trader.

The deal priced Tuesday.

A market source said the issue was flat at the end of the day, trading at $24.67.

The source added that the volume weighted average price “was a bit lower,” at $24.57.

The deal came upsized from $75 million and at the tight end of the 8.125% to 8.25% price talk.

Morgan Stanley & Co. LLC, UBS Securities LLC and Keefe Bruyette & Woods Inc. ran the books.

Spark Energy Inc.’s $35 million of 8.75% series A fixed-to-floating rate cumulative redeemable preferreds – a deal priced late Wednesday – were meantime seen offered at $24.65, though a trader noted that he was “not hearing much” going on in the new issue.

A source remarked that the company was looking to “grow the deal to as much as $40 million,” though he had not heard if those efforts had been successful or not.

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