Oil price gains boost energy sector preferreds; Hancock notes firm; HSBC active, higher

By Stephanie N. Rotondo

Phoenix, March 23 – The preferred stock market was trending higher in Monday trading, helped in part by modestly higher oil prices.

The Wells Fargo Hybrid and Preferred Securities index ended up 19 basis points, after being up 8 bps at mid-morning.

For their part, West Texas Intermediate crude rose 76 cents, or 1.63%, to $47.33 a barrel for May delivery. Brent crude meantime gained 57 cents, or 1.03%, to close at $55.89.

The gain in the commodity in turn gave the energy sector a boost, at least initially.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) firmed up 48 cents, or 2.24%, to $21.88. The units were up 31 cents, or 1.45%, in mid-morning trades at $21.71.

Goodyear Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD), however, came in a little from its earlier trades, finishing up 4 cents at $7.84. The preferreds has been up as much as 16 cents, or 2.05%, at $7.96.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) then erased all of its early gains, closing off 11 cents at $21.11.

Early in the session, the preferred units were up 31 cents, or 1.46%, to $21.53.

The oil price rally came despite comments made by Saudi Arabia’s oil prime minister, who said the OPEC nation was producing at a near record of approximately 10 million barrels per day.

Ali al-Naimi, the oil prime minister, further commented that it would not cut production without the cooperation of non-OPEC producers.

“We tried, we held meetings [to discuss production cuts] and we did not succeed because countries outside OPEC were insisting that OPEC carry the burden and we refuse that OPEC bears the responsibility,” al-Naimi said.

Meanwhile, a trader said Hancock Financial Co.’s $150 million of 5.95% $25-par notes due 2045 – a deal from March 2 – had “moved back up,” pegging the issue at $24.50 bid, $24.75 offered.

That issue has yet to list, the trader noted.

As for the new issue calendar, the trader said he was “hearing something might come today,” though he had yet to see any announcements.

“It’s probably not a big name then,” he remarked.

HSBC rises

HSBC Holdings plc’s 8% exchangeable perpetual subordinated capital securities (NYSE: HSEB) ended the day higher after the London-based bank announced plans for a contingent convertible issue.

The securities closed up 3 cents at $26.26.

On Monday, the company gave price talk for the new deal in a 6.625% area.

Proceeds will be used for general corporate purposes.

One market source said the new deal “will raise the probability that some of their outstanding issues will get called,” noting that most, if not all, of HSBC’s outstanding preferred issues “will lose their regulatory treatment” in the next seven years.

The 8% securities, for one, become callable on Dec. 15.

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