China’s troubles continue to take toll on preferred stocks, broader markets; Merrill issue active

By Stephanie N. Rotondo

Seattle, Jan. 7 – The preferred stock market was trading off again on Thursday, though perhaps not as much as some had expected.

“I thought we would see a little more of a shakeup after China last night,” a trader said, referring to the nation’s second stock market trading halt of the year. “There should be a greater risk-off trade going on. The second biggest economy hitting its circuit breakers twice in a week plus [the devaluation of the yuan] should be a bigger deal than it is.”

“But there’s nothing to see here...yet,” the trader said. “But I think there will be.”

“We had a tiny bit of a rebound,” said another market source. He noted that the Wells Fargo Hybrid and Preferred Securities index had fallen as much as 50 basis points but ended down 46 bps.

The index was down 21 bps at mid-morning.

On a broader basis, the equity markets declined 2% to 3%, while domestic crude was off 2.36%, trading at $33.17.

In preferred dealings, a source remarked that “as you can imagine, volume was really, really light.” However, there were a couple issues that saw “decent” activity, he said.

One such issue was Bank of America Corp.’s Merrill Lynch-linked 7% trust originated preferreds securities (NYSE: MERPD), which were recently called along with two other Merrill issues.

The preferreds fell 2 cents to $25.12.

The issue will be redeemed Jan. 29 at par plus accrued dividends.

Meanwhile, Morgan Stanley & Co. Inc.’s 6.25% capital securities (NYSE: MWR) were also on the active side, sliding 7 cents to $25.51, while HSBC Holdings plc’s 8% exchangeable perpetual subordinated capital securities (NYSE: HSEB) continued to trend in line with the market, falling 9 cents to $26.07.

A big downer on the day was Alexandria Real Estate Equities’ 7% series D cumulative convertible preferreds (NYSE: AREPD), which dropped 60 cents, or 2.17%, to $27.00.

© 2015 Prospect News.
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