Morning Commentary: Preferreds sell off on mortgage rates, oil prices; REITs suffer; oil names drop

By Christine Van Dusen

Atlanta, Jan. 20 – The preferred stock market was in full sell-off mode on Wednesday morning as mortgage rates and oil prices put pressure on the securities.

Housing-related names like Resource Capital Corp. plummeted in early trading, with the company's 8.625% fixed-to-floating rate series C cumulative redeemable preferreds (NYSE: RSOPC) dropping about $2.18 to $12.57 as the market drifted downward, a trader said.

“Real estate prices hit an all-time high, so people are nervous about leverage and what’s going on overall,” he said. “Anything with a REIT in its name is getting smashed right now.”

Energy-linked paper also continued to suffer on Wednesday. Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) traded at $4.04, down 21 cents.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) traded down 55 cents at $2.55. And Legacy Reserves LP’s series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) dipped 17 cents to $2.13 on Wednesday morning.

“There seems to be a strong sell-off in the preferreds market,” the trader said.

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