Preferreds shed early gains; Banc of California up; Campus Crest rebounding; energy rises

By Stephanie N. Rotondo

Phoenix, April 6 – Preferred stocks ended Monday’s session “basically flat,” a market source said.

The Wells Fargo Hybrid and Preferred Securities index was down 2 basis points at the bell. Earlier in the session, it was up 2 bps.

Given that the markets closed early for the Good Friday holiday, investors might have come in Monday a little spooked by Friday’s weak jobs report.

“I thought we’d see a continued sell-off in Treasuries because of the jobs number last week,” one trader remarked.

The latest jobs data showed 126,000 nonfarm jobs being added in March, which was about 120,000 less than expected. The results have caused some to speculate that any plans the Federal Reserve had to raise interest rates could be stymied.

In the preferred primary, there was no fresh talk of new deals, a trader reported.

In the secondary, Banc of California Inc.’s $100 million of 7.375% series D noncumulative preferreds – a deal from Tuesday’s business – were seen moving up to a $25.10 to $25.22 context.

The shares ended the day at $25.23, up 13 cents.

The deal came upsized and at the tight end of talk. On Thursday, the new issue was assigned a temporary reporting symbol of “BLBLP.”

Campus’ rebound continues

Campus Crest Communities Inc.’s 8% series A cumulative redeemable preferreds (NYSE: CCGPA) continued to regain ground after plummeting on Wednesday as the company announced a suspension of dividend payments for 2015.

The preferreds closed up 29 cents, or 1.26%, to $23.30 on Monday.

The issue was the day’s most actively traded preferred among paying securities, according to a market source.

The Charlotte, N.C.-based company is focusing on “strategic repositioning, and strengthening our financial and liquidity position,” said Richard Kahlbaugh, Campus Crest non-executive chairman, in a press release issued Wednesday. “The board of directors feels that suspending the company’s dividend payment at this time is a prudent step as we enhance our balance sheet and ensure compliance with the covenants in our financial agreements.”

Energy names improve

An over 5% gain in oil prices helped the energy sector move higher on Monday.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) improved 71 cents, or 3.44%, to $21.36, while Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) put on 31 cents, or 3.93%, to close at $8.19.

For its part, West Texas Intermediate crude oil gained $2.81, or 5.72%, to $51.95 per barrel. Brent crude jumped $2.91, or 5.3%, to $57.86.

The gain in oil was attributed partly to word that Saudi Arabia had increased prices to its Asian customers – indicating a gain in demand in that region – and partly to the realization that an end to oil-exporting sanctions in Iran will likely not have much impact on supply in the near term.

S&P announces index changes

Overall, a source said volume for the day was “very, very light.”

However, as Standard & Poor’s announced a rebalancing of its preferred stock index on Monday, some issues might begin to move about as investors jockey for position based on the additions – and deletions – to the ETF.

JPMorgan Chase & Co.’s 6.125% series Y noncumulative preferreds (NYSE: JPMPF) made the addition list and ended the day up nearly 3 cents at $25.667. Bank of America Corp.’s 6.5% series Y noncumulative preferreds (NYSE: BACPY) will also be added to the index, and those preferreds finished Monday’s session up 6 cents at $25.75.

All told, S&P is adding seven deals to the index and deleting five others. The changes will become effective at the close of business on April 17.

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