Preferreds sell off amid broader market weakness; American Financial $25-par notes retreat

By Stephanie N. Rotondo

Seattle, Nov. 13 – A preferred stock trader said that “generally the secondary market is softer” in 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 early in the session. However, the issue staged a comeback, ending the day up 2 cents, or 1.2%, at $1.70.

The 10% series C cumulative preferreds (NYSE: GDPPC) were not as lucky, closing off 12 cents, or 6.98%, at $1.60.

Meanwhile, Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were initially off 21 cents, or 2.05%, at $10.02, but ultimately finished down just 2 cents at $10.21.

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

West Texas Intermediate crude declined 2.28% to $40.80.

On Thursday, the U.S. Energy Information Administration reported its seventh consecutive week of inventory gains. Come Friday, active U.S. oil rigs increased for the first time in 11 weeks.

Additionally, the International Energy Agency issued a report that said there were about 3 billion barrels of crude and oil products sitting in warehouses around the globe. The agency also opined that a mild winter will only serve to fuel the oil glut as demand declines.

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, 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 on Friday as retail sales remained below expectations and consumer sentiment was not stellar. The S&P 500 dropped 22.93 points, or 1.2%, to close at 2,023.04.

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