S&P index rebalances, boosts prices, liquidity; Vornado's new deal frees; Stifel listed

By Stephanie N. Rotondo

Phoenix, Jan. 18 - A rebalancing of Standard & Poor's preferred stock index resulted in heavy late-day trading, a market source reported Friday.

"The market was pretty flat," the source said, until about 2:30 p.m. ET. In the last hour and half of trading, volumes suddenly increased significantly and particularly in issues that were being added to the index. The source pointed out that the number of issues trading over 500,000 shares for the day was 14, which was "a lot of trading."

As a result of that, the market ended the day up nearly 5 cents on average for $25-par issues.

"That's surely due to technical factors and not fundamental reasons," the source remarked.

The S&P U.S. preferred stock index traded up $2.61 to $835.62.

New adds for S&P index

S&P's preferred stock index reset resulted in heavy trading for issues that were being added to the catalog.

A market source did point out that the day's biggest trader - Bank of America Corp.'s Merrill Lynch-linked 8.625% series 8 noncumulative preferreds (NYSE: BMLPQ) - was likely due to an ETF looking to "raise cash to buy into the other issues."

That issue saw 3.07 million shares changing hands, and the stock ended up 4 cents to $25.90.

Of the issues being added to the index, General Electric Co.'s 4.875% $25-par notes due 2052 (NYSE: GEB) put on a dime to close at $25.85. Goldman Sachs & Co.'s 5.95% series I noncumulative preferreds (NYSE: GSPI) meantime slipped 7 cents to $25.55.

And, Discover Financial Services Inc.'s 6.5% series B noncumulative preferreds (NYSE: DFSPB) declined 6 cents to $26.18.

S&P announced the changes to the index on Jan. 8. The changes went into effect on Friday. Of the alterations, 34 new issues were added and four issues were deleted.

Recent issue rundown

Vornado Realty Trust's new $300 million offering of 5.4% series L cumulative redeemable preferreds - a deal that priced early Thursday - freed to trade Friday, according to a source. The issue was holding around $24.70.

JMP Group Inc.'s $40 million of 8% $25-par senior notes due 2023 - another deal that came early Thursday - was meantime trading at $24.95 bid.

A trader also noted that a $60 million 5.875% issue of series C perpetual preferreds from Federal Agricultural Mortgage Corp., or Farmer Mac, got a trading symbol but added that he didn't think it would actually list on any exchange until next week.

The trader quoted the preferreds at $25.25 bid, $25.32 offered.

In other recent deals, Stifel Financial Corp.'s $150 million of 5.375% $25-par senior notes due 2022 listed on the New York Stock Exchange on Friday under the ticker symbol "SFN."

The issue priced Dec. 18.

Paper was trading at $25.48 at midday, compared to opening levels of $25.25.

The issue closed at $25.36.

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