Morning Commentary: Preferreds weaken in line with broader markets; foreign banks trade mixed

By Stephanie N. Rotondo

Seattle, Feb. 19 – The preferred stock market was in retreat early Friday after trending toward the firm side all week.

The softness came as the broader markets also lost momentum, driven by renewed declines in oil and a larger-than-expected rise in consumer prices that have some pondering an interest rate hike this year.

The Wells Fargo Hybrid and Preferred Securities index was off 27 basis points at mid-morning.

“The hybrid market is stuck in the mud,” one trader said, adding that things overall were “super quiet.”

Goldman Sachs Group Inc.’s $675 million of 6.3% series N noncumulative preferreds continued to be on the busier side. A trader said the recently priced issue was “still right where it was yesterday,” trading around $25.05.

Another market source placed the issue at that level but deemed it down 7 cents.

The deal came Monday via Goldman Sachs & Co. and is trading under the temporary ticker “GSHSP.”

Meanwhile, activity in foreign banks stepped up again. Deutsche Bank AG’s 8.05% trust preferred securities (NYSE: DKT) were initially weaker but traded up 2 cents to $24.74 by mid-morning. Barclays Bank plc’s 6.625% series 2 noncumulative callable dollar preference shares (NYSE: BCSP), however, were off a penny at $24.75.

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