Preferred market firms; energy names gyrate as crude gains; recent new issues in focus

By Stephanie N. Rotondo

Seattle, May 12 – The preferred stock market was trending higher on Thursday, though the new issue pipeline remained quiet.

A trader said that he “thought we were going to see a deal today,” but as none had been announced, he opined the pipeline would be closed until Monday.

The Wells Fargo Hybrid and Preferred Securities index closed 6 basis points higher. The index was up 4 bps at mid-morning.

Yet another gain in crude oil was also helping energy sector preferreds initially inch upward, but paper eventually gave up their ground.

“Oil continues to eke up here,” a trader said.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were up 7.45 cents, or 7.23%, at $1.1045 in early trading. The rally came after two days of hefty losses following the company’s earnings release late Monday.

However, the losses continued to mount by the bell, as the units finished off over 5 cents, or 5.05%, at 97.8 cents.

Legacy Reserves LP’s 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) were meantime up 15 cents, or 2.77%, at $5.56 at mid-morning. That issue gave up those gains to end down 4 cents at $5.37.

For its part, domestic crude was up nearly 1% at mid-morning, ticking up toward $47 a barrel – a new 2016 high. While the commodity did finish the session higher, it was off from the day’s highs.

The gains came as the International Energy Administration said demand was increasing, while production was slowing.

Recently priced deals were also in focus during the session.

Public Storage’s $200 million of 5.125% series C cumulative preferreds were seen offered at par in early trades. The paper closed up 8 cents at $24.98.

The issue priced Tuesday and is trading under a temporary ticker, “PBBSP.”

DuPont Fabros Technology Inc.’s $175 million of 6.625% series C cumulative redeemable preferreds were meantime pegged at $25.02 bid, $25.05 offered. That issue also priced Tuesday.

And, Sunstone Hotel Investors Inc.’s $75 million offering of 6.45% series F cumulative redeemable preferred stock – yet another issue from Tuesday’s business – continued its wild gyrations. The preferreds were at $25.20 bid at midday, according to a trader.

The preferreds closed at $25.40, unchanged on the day. But the securities traded in a wide range between $25.20 and $25.75.

The preferreds are trading under the temporary symbol,” STNHP.”

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