Morning Commentary: Yemen bombings weigh on market, but oil rally boosts energy preferreds

By Stephanie N. Rotondo

Phoenix, March 26 – The preferred stock market was softer early Thursday, following the trend of the broader markets, as Saudi Arabia and its Arab allies launched a bombing campaign against Houthi rebels in Yemen.

The Wells Fargo Hybrid and Preferred Securities index was down 3 basis points at mid-morning.

The military action resulted in a decent spike in oil prices. West Texas Intermediate crude rose 2.3% in early trades, moving above the $50 mark.

As a result, most energy preferreds were “doing fine,” a trader said.

Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) were up 26 cents, or 3.39%, at $7.94 at mid-morning, while Vanguard Natural Resources LLC’s 7.875% series A cumulative redeemable preferred units (Nasdaq: VNRAP) had gained 39 cents, or 1.61%, to $24.60.

Meanwhile, a trader saw National General Holdings Corp.’s new 7.5% series B noncumulative preferreds quoted wide at $24.77 bid, $24.85 offered.

Another source placed the issue at $24.87, up 6 cents from Wednesday’s close and up 2 cents from the open.

The $150 million deal priced Tuesday, coming upsized from $50 million. The issue freed to trade early Wednesday and was assigned a temporary reporting symbol of “NTGKP.”

Morgan Stanley & Co. LLC, UBS Securities LLC and Keefe Bruyette & Woods Inc. ran the books.

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