Midday Commentary: Preferreds stay firm; Digital Realty dips despite positive earnings guidance

By Stephanie N. Rotondo

Phoenix, Jan. 7 - The preferred stock market was again ticking higher in Tuesday trading.

The Wells Fargo Hybrid and Preferred Securities index was up 8 basis points as of mid-morning. A trader noted that long Treasury bonds were "flat."

"We're still waiting on a new deal," the trader said.

Digital Realty Corp. is planning on bringing a new deal at some point in early 2014, the company said in a press release on Tuesday. The release also included preliminary financial data for the fourth quarter, which caused the company to raise its 2014 guidance.

But despite the "good news," as one trader put it, the company's preferreds were trending toward the weaker side.

The 5.875% series G cumulative redeemable preferreds (NYSE: DLRPG) were off 24 cents, or 1.27%, at $18.66 at mid-morning.

Real estate investment trusts have generally been active of late and ticking higher. A trader noted that Barron's published an article over the weekend that said preferreds in the REIT space were "still cheap" and that the sector "should have a decent performance this year."

National Retail Properties Inc.'s 5.7% series E cumulative redeemable preferreds (NYSE: NNNPE) were highly active early in the session, rising 19 cents to $19.74.

In the financial realm, BB&T Corp. got a shot in the arm as analysts at JPMorgan Chase & Co. moved the firm's common stock to "overweight." The analysts indicated that regional banks such as BB&T could soon recover from the Federal Reserve's tapering of its stimulus program.

The 5.625% series E noncumulative perpetual preferreds (NYSE: BBTPE) were up 9 cents at $21.19.

And speaking of JPMorgan, a trader said that bank's preferreds "could start running up once they get all their litigation behind them."

As was previously reported, JPMorgan inked a deal with the federal government to settle an investigation into the company's role in the Bernie Madoff ponzi scheme. It was officially announced Tuesday morning that the firm would pay $1.7 billion in order to avoid criminal charges.

JPMorgan's 5.5% series O noncumulative preferreds (NYSE: JPMPD) were up 4 cents at $21.45.

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