Morning Commentary: Preferred stocks improve slightly; Bluerock, Targa issues see some trading

By Christine Van Dusen

Atlanta, Oct. 21 – Preferred stocks ticked up slightly on a quiet Wednesday morning, with limited activity noted for recent issues from Bluerock Residential Growth REIT Inc. and Targa Resources Partners LP.

“We haven't heard about any new issues being launched,” a trader said. “I'd say it’s slightly positive, with the long bond up, but that's barely.”

Bluerock’s new issue – $62.5 million 8.25% series A cumulative redeemable perpetual preferred stock (BRGPA) that priced last week at $25.00 per share – traded between $25.10 and $25.30 on Wednesday morning after moving to $25.35 on Tuesday.

Wunderlich Securities Inc. and Compass Point were the joint bookrunning managers. DA Davidson & Co. and Janney Montgomery Scott LLC were co-lead managers.

Houston-based Targa's 9% fixed-to-floating rate cumulative redeemable preferred units – now listed as "NGLS.PA" – traded Wednesday morning between $25.00 and $25.05, up about 2 cents from Tuesday.

An additional $15 million of the units were sold last week via Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC. Added to the $110 million initially sold on Oct. 7, total issuance comes to $125 million.

The over-allotment option allowed for up to $16.5 million additional units to be sold.

And Fannie Mae and Freddie Mac saw very little action on Wednesday morning, even after the news that the White House had declined to release the mortgage companies from government control, the trader said.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) opened Wednesday at $4.95, flat to Tuesday.

The 8.25% series T noncumulative preferreds (OTCBB: FNMAT) moved down 4 cents to $6.00.

Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) moved up 2 cents to $5.00 on Wednesday morning.

“Over the past week they've definitely weakened, but we're really kind of back to where we were last week,” the trader said. “They had run up in the beginning of October, and they've kind of pulled back to really where they started. Nothing crazy on the preferred end.”

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