Preferreds rebound midweek amid calmer markets, fresh data; RBS shares firm; Goodrich up

By Stephanie N. Rotondo

Phoenix, Sept. 2 – The preferred stock market was rebounding Wednesday as global markets appeared to calm down and fresh economic data rolled out.

The Wells Fargo Hybrid and Preferred Securities index closed 12 basis points higher.

U.S. factory orders gained for a second month in July, though less than expected. In addition to that data, investors were also keeping an eye out for the latest oil inventory report from the Energy Information Administration, which showed a 4.7 million-barrel gain last week.

The Federal Reserve also published its latest Beige Book, which gave a mixed impression of the U.S. economy, making the timing of an interest rate hike unclear.

“People are just waiting to see what happens in the next few weeks,” a trader said, noting that many are expecting the Fed to raise interest rates soon – possibly even this month. But the trader noted that any potential increase is “already priced in,” so it was simply a matter of timing.

For some preferred investors, that means taking a step back.

“Preferreds just aren’t moving much right now,” a trader said. With many desks empty due to end-of-summer vacations, “there’s more of a focus on this weekend than [on the market].”

RBS preferreds rise

Royal Bank of Scotland Group plc wrapped a redemption of four series of preferreds on Tuesday. Come Wednesday, investors were jumping into some of the Edinburgh, Scotland-based bank’s remaining issues.

The 5.75% series L noncumulative dollar preference shares (NYSE: RBSPL) improved by 4 cents to $24.89, while the 6.08% noncumulative guaranteed trust preferred securities (NYSE: RBSPG) gained 3 cents to $25.04.

The 5.9% noncumulative guaranteed trust preferred securities (NYSE: RBSPE) pushed up 8 cents to $24.79.

On July 30, RBS said it was redeeming all of its outstanding 6.4% series M noncumulative dollar preference shares, 6.35% series N noncumulative dollar preference shares, 6.25% series P noncumulative dollar preference shares and 6.75% series Q noncumulative dollar preference shares.

Goodrich recovers

Goodrich Petroleum Corp.’s 10% series C cumulative redeemable preferreds (NYSE: GDPPC) and 9.75% series D cumulative redeemable preferreds (NYSE: GDPPD) rebounded on Wednesday after the company announced it was privately exchanging 5% convertible senior notes due 2032 for $27.5 million of new 5% convertible senior notes due 2032.

The Cs jumped 30 cents, or 20%, to $1.80, while the Ds gained 22 cents, or 11.7%, to $2.10.

The preferreds had been losing ground since Monday, when the Houston-based oil and gas company said it was cancelling its dividends.

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