Morning Commentary: Preferreds sell off amid broader weakness; American Financial notes retreat

By Stephanie N. Rotondo

Seattle, Nov. 13 – A preferred stock trader said that “generally, the secondary market is softer” as of early Friday trading.

“Certainly it’s softer in energy names,” he noted.

Such was the case for Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD), which declined 8 cents, or 4.76%, to $1.60. Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were off 21 cents, or 2.05%, at $10.02.

The energy space – particularly those related to oil and gas – were weak as oil prices declined. Crude was slated for its biggest weekly loss Friday, following reports of continued record stockpiles.

Meanwhile, the trader said that even American Financial Group Inc.’s recently priced 6% $25-par subordinated debentures due 2055 had “come off” with the broader market sell-off.

The issue – which priced Monday and freed up on Tuesday – had been trading above par but was quoted at $24.90 bid, $24.92 offered at mid-morning on Friday, the trader said.

“The stock market sell-off is starting to effect preferreds, which it should,” the trader said. “People are just losing their appetite a little bit, that’s all.”

The common equity market was down over 150 points early Friday as retail sales remained below expectations and consumer sentiment was not stellar.

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