Preferred stocks rally as week ends; RBS improves; Fannie, Freddie firm; Breitburn gains

By Stephanie N. Rotondo

Seattle, Jan. 8 – The preferred stock market was “trying to rebound,” a trader said Friday.

The Wells Fargo Hybrid and Preferred Securities index closed the last trading day of the week 31 basis points higher. The index was up 13 bps at mid-morning.

The course reversal came after China’s markets showed improvement following two trading-day halts this week. Also steadying the markets – at least on the domestic side – was word that U.S. nonfarm payrolls added 292,000 jobs in December. Additionally, October and November jobs figures were revised to add another 50,000 jobs for those months.

“I imagine people feel the China fears are overblown and our numbers are better than expected,” a trader said.

But investors still have one big question on their minds, the trader noted: How many times will the Federal Reserve raise interest rates this year?

“I don’t think it will be as many as they are saying,” the trader said.

In the day’s dealings, Royal Bank of Scotland Group plc’s paper – which has trended toward the positive side this week, despite the overall weaker tone of the market – remained firm as the week wore down.

The 5.9% noncumulative guaranteed trust preferred securities (NYSE: RBSPE) ended up 4 cents at par.

Also moving higher were Fannie Mae and Freddie Mac preferreds, though there was no fresh news to act as a catalyst.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) gained a penny, closing at $3.31. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) gained 2 cents, ending at $3.32.

One market source, however, pointed out that the GSE’s preferreds – which have been on the decline of late – were “relatively unchanged for the day and [the common stock was also] unchanged.”

“The situation there is very speculative, and trading patterns and price movement are erratic,” he added.

Breitburn brightens

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable preferred units (Nasdaq: BBEPP) inched higher on Friday despite continued weakness in domestic crude oil prices.

The units finished at $4.82, a gain of 11 cents, or 2.34%.

For its part, oil fell 1.2% on the day, falling below $33 a barrel.

On Monday, the Los Angeles-based MLP declared a monthly distribution on its series A units, as well as on its 8% series B perpetual convertible preferred units.

Holders of the series A units will receive 17.1875 cents per unit on Feb. 15. On the Bs, the company has opted to pay-in-kind for the distribution, giving holders 0.006666 PIK units per each convertible unit.

The series B distribution is payable on Jan. 15.

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