Preferred market rises despite subdued volume; oil and gas sector gains; RBS trends higher

By Stephanie N. Rotondo

Phoenix, Jan. 2 – Preferred stocks were edging up in the first trading session of 2015, though liquidity was muted.

“Everything is ticking up slightly,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index closed up 49 basis points. It was up 16 bps at mid-morning.

He added that there was “no real reason” for the strength, though he also noted that “the long bond is going through the roof, probably because the euro is getting beat up” and that U.S. manufacturing “expanded less than forecast.”

The latter, he said, was an indication that the economy might not be as strong as some people believe. Therefore, he speculated that the Federal Reserve will likely “keep rates at these low levels for awhile,” probably though the year.

The oil and gas space was firming up with the market, even as oil prices hit new lows.

West Texas Intermediate crude fell 61 cents, or 1.15%, to $52.66 per barrel. Brent Crude declined 97 cents, or 1.69%, to $56.36 per barrel.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) finished up 78 cents, or 4.04%, at $20.19. Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) improved 47 cents, or 5.93%, to $8.40.

RBS rises

Royal Bank of Scotland Group plc’s preferreds were trending toward the upside on Friday, even as it was reported the Edinburgh, Scotland-based bank was facing an increase in its U.S. mortgage securities settlement.

The 6.125% series R noncumulative dollar preference shares (NYSE: RBSPR) dominated trading not only in the structure, but of the market as a whole, with 1.08 million shares being exchanged.

The shares rose 9 cents to $23.90.

RBS may be forced to increase its provision related to claims of misconduct in trading U.S. mortgage securities to $7.7 billion.

The bank paid $2.9 billion last year in regards to allegations made by the Federal Housing Finance Agency that the company had knowingly sold faulty mortgages to Fannie Mae and Freddie Mac between 2005 and 2007.

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