Preferred stocks gyrate amid commodity rout; calendar appears quiet; Breitburn weakens

By Stephanie N. Rotondo

Phoenix, July 20 – Preferred stocks were volatile in Monday trading amid a commodity crush, particularly in oil and gold.

For its part, West Texas Intermediate crude was off nearly 2% by the bell.

A trader said the market was only “slightly moved,” seeing “more red than green.”

The Wells Fargo Hybrid and Preferred Securities index ended flat but was down 5 basis points at mid-morning.

Looking to the new issue calendar, a trader said he had not yet heard of any deals slated to come to market. He added that he thought “for the next four to five weeks, it’s going to be pretty slow.”

In the secondary space, JPMorgan Chase & Co.’s 6.1% series AA noncumulative preferreds (NYSE: JPMPG) were on the active side, with nearly 1 million shares being exchanged. The preferreds were following the early trend of the day, closing unchanged at $25.16. Paper had traded as low as $25.11 and as high as $25.20.

Meanwhile, Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) took a serious hit amid crude oil’s sub-$50 slump.

The units finished the day at $15.78, down $1.12, or 6.63%. Nearly 238,000 shares were exchanged, well over the daily average of about 44,000 shares.

Concerns about a supply glut have been weighing on oil prices of late, especially as the United States and Iran have reached a nuclear accord. Under that accord, sanctions on Iran’s oil will be lifted, allowing it to once again sell its products on the open market.

But the entrance of Iranian oil into the market has some spooked, given that the U.S. currently holds a record amount of crude in its stockpiles – this despite the fact that many domestic producers have ramped down production.

REITs active, better

Real estate investment trusts have been on the busier side of late, and Monday was no exception.

American Homes 4 Rent saw decent activity in two of its preferred issues. The 5% series A cumulative participating preferreds (NYSE: AMHPA) closed up 5 cents at $25.27, while the 5.5% series C cumulative participating preferreds (NYSE: AMHPC) increased 8 cents to $25.25.

Also active were PS Business Parks Inc.’s 5.7% series V cumulative preferreds (NYSE: PSBPV), which ended 10 cents higher at $23.58.

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