Morning Commentary: Preferreds lose ground at week’s end; Resource Capital weakens; oil names drop

By Stephanie N. Rotondo

Seattle, Jan. 15 – The preferred stock market was declining early Friday as a slew of fresh economic data dragged down the broader markets.

“The stock market is getting crushed and oil is down,” a trader noted. “We’ve got a sell-off in a lot of issues.”

Still, the trader added that liquidity was on the lighter side, leading him to opine that “it could be a lot worse I guess.” He also speculated that market players were possibly hesitant to jump in given the weak tone and the upcoming long weekend in honor of Martin Luther King Jr. Day.

The Wells Fargo Hybrid and Preferred Securities index was off 39 basis points at mid-morning.

As the market drifted down, a trader said “BDCs and mortgage REITs are getting smoked today,” due to the fact that banks have been warning that mortgage units have not fared so well. As such, names like Resource Capital Corp. have been pressured.

Resource Capital’s 8.625% fixed-to-floating rate series C cumulative redeemable preferreds (NYSE: RSOPC) were off 56 cents, or 3.48%, at $15.55.

Oil’s downward spiral was meantime pushing energy-linked paper further into the red.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were down 59 cents, or 10.15%, at $5.22 in early trades. Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were 42 cents, or 9.57%, weaker at $3.97.

For its part, domestic oil prices were off more than 4% early Friday, trading sub-$30 a barrel.

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