Preferreds rebound from Monday lows amid low volume; REITs appear on bid list, active

By Stephanie N. Rotondo

Phoenix, Feb. 4 - Preferred stocks were rebounding some in early Tuesday trading after falling on Monday in line with the common stock market.

The Wells Fargo Hybrid and Preferred Securities index was up 4 basis points as of mid-morning. At the bell, it was up 14 bps.

"Overall, it was an up day for the market," a market source said.

Still, a trader said that things were pretty quiet" on the preferred front.

"I think everybody expected bonds to sell off and the stock market to go crazy," he said. Investors are still looking for yield, but buyers are being more cautious as well, resulting in companies holding off on any new issue plans.

"I imagine with these rates, we'll see a lot of new issues coming to market," he said. "Not yet though."

As for recent deals, Verizon Communications Inc.'s 5.9% $25-par notes due 2054 - a $500 million deal that came Thursday - were seen softer in a $24.96 to $24.98 context early in the session, according to a trader.

The issue had been at par bid early Monday.

JPMorgan Chase & Co.'s $850 million of 6.7% series T noncumulative perpetual preferreds - a deal from Jan. 23 - were meantime seen at $24.80 bid, $24.85 offered, also down from the previous day's levels.

But as the day came to an end, another source said the issue was up 26 cents at $24.86.

"It has been slowly edging up over the last few days," the source said, noting that the issue had "tanked" upon pricing due to its size.

REITs get busy

A market source said "a lot of [real estate investment trusts] traded today," as there were "bid lists out. Somebody is lightening their portfolio."

Among the most active REITs were Digital Realty Trust Inc. and CBL & Associates Properties. Digital Realty's 7% series E cumulative redeemable preferreds (NYSE: DLRPE) rose a dime to $23.18, while CBL's 6.625% series E cumulative redeemable preferreds (NYSE: CBLPE) jumped 24 cents to $22.60.

Also on the most active list was Bank of America Corp.'s floating-rate series 5 noncumulative preferred stock (NYSE: BMLPL), "that busted convert," a source said. The issue closed the day off 11 cents at $19.89.

Reinsurance Group of America Inc.'s 6.2% $25-par fixed-to-floating rate subordinated debenture due 2042 (NYSE: RZA) meantime moved up 15 cents to $25.15, while Southern California Edison's 5.1% trust preference securities (NYSE: SCEPG) put on 8 cents, ending at $19.77.

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