Morning Commentary: Preferred stocks remain firm post-Fed; Global Indemnity in market

By Stephanie N. Rotondo

Seattle, March 16 – Preferred stocks continued to bounce in early Thursday trading after rising on Wednesday in the wake of an interest rate increase from the Federal Reserve.

The Wells Fargo Hybrid and Preferred Securities Index was up 32 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was up 9 bps.

A planned new issue hit the tape early in the session, a $75 million sale of $25-par subordinated notes due 2047 from Global Indemnity Ltd.

Price talk is 7.875% to 8%, a market source reported.

A trader saw the paper at $24.60 bid, $24.82 offered in the early gray market.

Morgan Stanley & Co. LLC, UBS Securities LLC and RBC Capital Markets are running the books.

Meanwhile, Two Harbors Investment Corp.’s $125 million of 8.125% series A fixed-to-floating rate cumulative redeemable preferred stock began trading on the New York Stock Exchange on Thursday.

In early trading, the paper was seen at $25.01, down from $25.20 at the open.

The deal came on March 7, upsized from $75 million and at the tight end of the 8.125% to 8.25% price talk.

Morgan Stanley, UBS and Keefe Bruyette & Woods Inc. were the bookrunners.

As for other recent issues that have not yet listed, New York Community Bancorp Inc.’s $500 million of 6.375% series A fixed-to-floating rate noncumulative preferreds – a deal that priced on Friday – were benefitting from the day’s upward moves.

The preferreds were up 11 cents at mid-morning, trading at $25.75.

The issue is trading under a temporary ticker, “NYBCP.”

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