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Morning Commentary: Preferreds firm in early trading; SCE paper gains; Compass gets a ticker
By Stephanie N. Rotondo
Seattle, June 22 – The preferred stock market was edging upward early Thursday, though overall trading volumes remained limited, market sources reported.
The Wells Fargo Hybrid and Preferred Securities Index was up 8 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was up 28 bps.
Most of the market’s attention was being directed at the $475 million offering of 5% series L trust preference shares issued by Southern California Edison Co.’s SCE Trust VI, a deal priced on Monday.
The issue was upsized from $200 million and came tight to the 5.25% price talk.
In early dealings Thursday, a trader saw the paper quoted at $24.95 bid, $25.02 offered.
Another source deemed the shares up 6 cents at $25.04.
The preference shares have been assigned a temporary ticker, “SCEEP.”
J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets and Wells Fargo Securities LLC ran the books.
Meanwhile, Compass Diversified Holdings LLC’s $100 million of 7.25% series A preferred stock was pegged at $24.80 bid, $24.87 offered at mid-morning.
That deal also came Monday, via BofA Merrill Lynch and UBS Securities LLC.
Like SCE Trust, the issue has a temporary trading symbol, “CMMPP.”
As for the secondary, Fannie Mae and Freddie Mac preferreds were under pressure as hopes for a stockholder-friendly reform plan waned.
Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) fell 22 cents, or 3.54%, to $6.00. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) slipped 20 cents, or 3.39%, to $5.70.
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