Morning Commentary: Bank earnings give preferred market a boost; Ashford Hospitality comes in

By Stephanie N. Rotondo

Seattle, Oct. 18 – The preferred stock market remained on firm ground early Tuesday as another round of positive earnings from the financial sector gave things a boost.

The Wells Fargo Hybrid and Preferred Securities index was up 23 basis points at mid-morning.

On the heels of Bank of America Corp.’s earnings beat on Monday – as well as better-than-expected figures from Wells Fargo & Co., Citigroup Inc. and J.P. Morgan Chase & Co. on Friday – Goldman Sachs Group Inc. reported quarterly results that came in above expectations. Also topping estimates were numbers from hedge fund BlackRock Inc.

Still, the results have done little to move preferreds or to jumpstart the primary space.

“I’m a little surprised,” a trader said, that there haven’t been any new issues from the banks.

“But it’s still early in the week, so we will see.”

While the banks have yet to bring any new preferred issues, they have been tapping the investment-grade bond market.

As for deals that have hit the tape, a trader said Ashford Hospitality Trust Inc.’s $150 million of 7.375% series G cumulative preferreds were “off a little bit,” trading around $24.85.

The deal came Oct. 13 via Morgan Stanley & Co. LLC and UBS Securities LLC.

PS Business Parks Inc.’s $165 million of 5.2% series W cumulative preferreds were meantime seen at $24.95 bid, par offered.

That issue came Oct. 11, with BofA Merrill Lynch, Morgan Stanley and Wells Fargo Securities LLC running the books.

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