Preferred stocks erase early losses to end firm; Atlas Resource, Yuma Energy list

By Stephanie N. Rotondo

Phoenix, Oct. 27 – Preferred stocks had a weak tone as Monday trading began but then came back to finish in positive territory.

The Wells Fargo Hybrid and Preferred Securities index closed up 5 basis points to 6 bps. At mid-morning, the index was down 7 bps.

In recent deals, Urstadt Biddle Properties Inc.’s $70 million issue of 6.75% series G cumulative redeemable preferreds – a deal from Wednesday’s business – continued to hang around $24.90 bid, according to a trader.

The shares did close at par, however.

In slightly older deals, Atlas Resource Partners LP’s $80 million issue of 8.625% class D cumulative redeemable perpetual preferred units were admitted to the New York Stock Exchange on Monday.

Yuma Energy Inc.’s $11.93 million of 9.25% series A cumulative redeemable perpetual preferred stock meantime began trading on the NYSE MKT.

Atlas came Sept. 25. Yuma priced at a discount on Oct. 16.

The Atlas paper finished the session at $24.50 versus the opening price of $24.15. The Yuma preferreds ended at $21.90, which compared to opening levels of $22.00.

Elsewhere in the secondary market, First Niagara Financial Group Inc.’s 8.625% series B fixed-to-floating rate noncumulative preferreds (NYSE: FNFGPB) remained under pressure following the bank’s financial release on Friday.

The report showed that the company took an $800 million non-cash goodwill impairment charge for the third quarter, resulting in a quarterly loss of $665 million.

The preferreds closed down a dime at $27.94. That was down from opening levels of $27.97.

‘Solid’ calendar expected

Monday’s volume was “light, to say the least,” according to a market source.

“Part of it is the time of the year; part of it is where you are in the [interest] rate cycle,” he said.

A lack of clarity on where rates stand – and which direction they are going to go – is also playing a role, he said.

But even with the confusion regarding interest rates, “we’re still expecting solid [new] issuance for most of the next 6 to 7 weeks.

“There are still banks in the U.S. that could issue something,” the source continued. “It depends on what peoples’ rate expectations are.”

Citigroup Inc.’s recent deal – a $1.5 billion issue of 5.8% $1,000-par series N fixed-to-floating rate noncumulative preferreds that priced Wednesday – might be perking up investors and issuers alike, however.

“It has been pretty well received,” the source said. “That makes investors feel good, and that makes issuers feel good about issuing more.”

In Monday trading, the Citi deal closed at 102.6, with a volume weighted average price of 100.72.

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