Preferred stock primary quiets down; BlueRock brings add-on deal; oil names gyrate

By Stephanie N. Rotondo

Seattle, April 20 – The primary preferred stock market was quiet again on Wednesday, as a trader said he was “told there would be no more deals this week.”

“Maybe next week,” he said.

And while the preferred space was generally firm – the Wells Fargo Hybrid and Preferred Securities index was up 7 basis points at mid-morning – the trader noted that “a lot of people are heading to New York for that syndicate party. So there’s not a lot going on.”

On Thursday, the Women’s Syndicate Association will hold its annual spring luncheon in New York.

One deal, however, did get done during the midweek session. BlueRock Residential Growth REIT Inc. said it sold $50 million of its 8.25% series A cumulative redeemable preferreds in an add-on offering.

The New York-based real estate investment trust originally priced $71.88 million of the preferreds on Oct. 15, 2015.

As for deals from earlier in the week, Bank of America Corp.’s $900 million of 6% series EE noncumulative perpetual preferreds were seen in a $25.15 to $25.20 context.

A market source said the paper closed at $25.15, off 3 cents.

The deal price Monday, coming in line with revised talk and upsized from $250 million. The issue freed to trade early Tuesday.

BofA Merrill Lynch ran the books.

Citigroup Inc.’s $1.5 billion of 6.25% $1,000-par fixed-to-floating rate noncumulative preferreds were meantime pegged at 102.25 at the close.

That deal also came on Monday, via Citigroup Global Markets Inc.

BlueRock prices add-on

BlueRock Residential Growth REIT sold an additional $50 million of its 8.25% series A cumulative redeemable perpetual preferreds (NYSE: BRGPA) on Wednesday.

The add-on offering lifted the total outstanding amount to $121.88 million.

The preferreds reacted negatively to the new deal, trading off 35 cents, or 1.38%, to $25.03.

Wunderlich Securities Inc. and Compass Point were the joint bookrunners. FBR Capital Markets and Janney Montgomery Scott LLC were the co-lead managers.

Proceeds will be used for future multifamily acquisitions and investments, and other general corporate and working capital purposes, which may include the repayment of debt and the funding of capital improvements.

Oil’s rebound eyed

Domestic crude oil prices were initially lower on Wednesday as investors grew concerned about inventory builds and production.

But after the U.S. Energy Information Administration reported that crude inventories increased less than the amount projected by the American Petroleum Institute and that domestic production had fallen for the sixth consecutive week, oil prices rallied.

The volatility in the commodity resulted in gyrations for oil and gas-linked preferreds, which ultimately ended mostly higher for the day.

Legacy Reserves LP’s 8% series A fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYP) ended the day up 15 cents, or 3.31%, at $4.06. The units were down 15 cents, or 3.82%, at $3.78 in early trades.

The 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) meantime rose 23 cents, or 5.87%, to $4.15.

That issue was among the day’s top percentage gainers.

However, Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) failed to benefit from the intraday rally. The units closed down 14 cents, or 5.49%, at $2.41. The day’s losses placed the issue among the day’s biggest percentage losers.

Domestic crude was off 1.77% at mid-morning, even as an oil worker strike in Kuwait came to an end. The nation already had tanker ships lining up to cart away its goods and production was increased to 1.6 million barrels a day from 1.1 million barrels pumped on Sunday.

The early weakness was also attributed to the API report released on Tuesday, which showed a larger-than-expected build of 3.1 million barrels for the week. Investors were therefore concerned as to what the Energy Information Administration’s data – set to be released Wednesday morning – would show.

The EIA report brought better news, which eventually led domestic oil prices up 3.18%, nearing the $44-mark. In its report, the EIA said crude inventories increased by 2.1 million barrels last week.

That was still above the 1.6 million barrel gain projected by analysts.

But the report also showed that U.S. production had decreased by 24,000 barrels a day and that distillate stockpiles had fallen 3.6 million barrels week over week.

© 2015 Prospect News.
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