Preferreds start week with gains; PG&E preferreds mixed after rating downgrades

By Abigail W. Adams

Portland, Me., Feb. 26 – The preferreds market started the week off on a positive foot with both the Wells Fargo Hybrid & Preferred Securities Financial index and the U.S. iShares Preferred Stock ETF closing Monday with gains.

The Wells Fargo Hybrid & Preferred Securities Financial index closed Monday’s session up 0.27%. The U.S. iShares Preferred Stock ETF was up 0.38%. Both market indicators saw a straight week of gains last week after seeing losses for most of February.

Last week ended with the pricing of a new deal. 1347 Property Insurance Holdings Inc. priced a downsized offering of $16 million, or 640,000 shares, of 8% series A perpetual cumulative preferred stock at $25.00 per share after the market close Feb. 23.

The new offering has not yet freed for trade in over the counter markets. The preferred stock will be listed on Nasdaq under the ticker “PIHPP.”

PG&E Corp. and Pacific Gas & Electric Co. preferreds were mixed on Monday with some seeing gains and others losses after both S&P and Fitch Ratings downgraded the San Francisco-based electric utility.

PG&E’s 4.8% redeemable preferreds saw large swings in trading prices on Monday. The notes were up $1.00, or 4.72%, to $22.20 early in the session.

The preferreds were unable to hold onto their gains and closed the day at $21.38, an increase of 18 cents, or 0.86%.

Pacific Gas & Electric’s 4.5% redeemable preferred stock closed Monday at $20.44, an increase of 43 cents, or 2.15%.

Pacific Gas & Electric’s 6% non-redeemable preferred stock was down 15 cents, or 0.55%, to $27.35 at Monday’s close.

Pacific Gas & Electric’s 5% nonredeemable preferred stock was up 11 cents, or 0.48%, to $22.99 early in the session. The preferreds’ climb continued and closed the day at $23.15, an increase of 27 cents, or 1.18%.

Pacific Gas & Electric’s 5% series A redeemable preferred stock was up 21 cents, or 0.96%, to $22.51 at the market close Monday.

Pacific Gas & Electric’s 5.5% nonredeemable preferred stock was up 29 cents, or 1.18%, to $24.94 at the market open. The preferreds lost their footing and closed Monday at $24.0189, a decrease of 5 cents, or 0.2%.

As previously reported, S&P lowered its long-term ratings on PG&E and Pacific Gas & Electric on Feb. 22, including the issuer credit ratings to BBB+ from A-, as a result of the fourth-quarter and year-end earnings report.

“In the year-end earnings release and communications, PG&E management was not able to clarify when and whether the suspended stock dividends will be resumed and did not offer any new or better information on the potential wildfire exposure amount that would prompt continued suspension,” the agency said in a news release.

Fitch Ratings downgraded PG&E and Pacific Gas & Electric on Monday to BBB+ from A- on Monday, as a result of potential exposure to third party liabilities associated with the wildfires.

PG&E suspended the quarterly cash dividend on the company’s common stock for the fourth quarter and subsidiary Pacific Gas & Electric suspended the dividend on the preferred stock beginning in the three-month period ending Jan. 31, 2018, due to uncertainty surrounding the causes and potential liabilities associated with the 2017 California wildfires.

PG&E is facing several lawsuits over the company’s alleged role in the wildfires. Sonoma County filed suit against the utility provider on Jan. 30.

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