Preferreds rebound in volatile session; NuStar Energy in focus after restructuring news

By Abigail W. Adams

Portland, Me., Feb. 9 – After a rough week of seeing mostly losses, the preferreds market rounded out the week by closing Friday on a positive note. The session was volatile with preferreds beginning the day heading down but climbing back to positive terrain by the market close.

NuStar Energy LP’s preferreds were in focus on Friday after the company released its fourth-quarter earnings report and announced a restructuring.

While NuStar’s preferreds traded down early in Friday’s session, some climbed back to positive territory by the market close.

Volatile

Initially Friday looked to be another down day for preferreds but the market climbed back into positive territory before the closing bell.

The Wells Fargo Hybrid & Preferred Securities Financial index was down 0.47% and the U.S. iShares Preferred Stock ETF was down 0.46% early in Friday’s session.

However, the Wells Fargo Hybrid & Preferred Securities Financial index climbed to end Friday up by 0.47%.

The iShares preferred ETF ended Friday up by 0.14%.

NuStar’s restructuring

NuStar Energy preferreds were in focus after the company announced a restructuring and released its fourth-quarter earnings report on Thursday.

While trading down early in the session, some preferreds rebounded while others remained in negative territory by the market close.

NuStar’s 8.5% series A fixed-to-floating rate cumulative redeemable preferred units closed Friday at $25.35, an increase of 9 cents, or 0.36%. The units saw nearly double their average trading volume on Friday.

NuStar’s 7.625% series B cumulative redeemable preferred stock was down 12 cents, or 0.51%, to $23.74 in heavy volume trading. The preferred stock continued to trade down to close Friday at $23.72, a decrease of 14 cents, or 0.59%.

The series B preferreds also saw more than double their average trading volume.

NuStar’s 9% series C fixed-to-floating rate cumulative redeemable preferred units closed Friday at $25.65, an increase of 19 cents, or 0.75%. The series C preferred units, in contrast, saw lower than average trading volume on Friday.

NuStar Logistics, LP’s 7.625% fixed-to-floating rate subordinated notes due 2043 began the day down but ended up in trading volume that was more than three times the note’s average.

The notes were down 1 cent, or 0.04%, to $25.26 early in the session. The notes climbed to end Friday at $25.28, an increase of 3 cents, or 0.12%.

NuStar Logistics is a wholly-owned subsidiary of NuStar energy.

NuStar announced plans to merge its general partner NuStar GP Holdings into its operations and reduce distribution for common units by about $200 million per year on Thursday.

The merger is subject to the approval of NuStar Holdings unit holders and may be canceled by either entity if the merger is not complete by Aug. 8, according to a company release.

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