Morning Commentary: Market ticks up in early trades; oil price rebound boosts sector preferreds

By Stephanie N. Rotondo

Seattle, Dec. 9 – A preferred stock trader said the market was “moving up a little bit” in midweek trading.

The trader remarked that he was not sure what was driving the space higher, though he opined that “maybe it’s the rebound in oil.”

The Wells Fargo Hybrid and Preferred Securities index was up 6 basis points at mid-morning. For its part, domestic crude oil prices were up over 1%, nearing $38 a barrel.

The trader further speculated that the gains in the commodity were due to it being “oversold.”

Whatever it was behind the gains, it was helping oil and gas preferreds recover lost territory.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were up 64 cents, or 10.68%, at $6.63 in early trading. Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were also better, rising 12 cents, or 1.88%, to $6.51.

Legacy Reserves LP’s 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) were meantime up 21 cents, or 3.09%, at $7.01.

Among non-paying issues, Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) improved 27 cents, or 44.74%, to 87 cents. The 10% series C cumulative preferreds (NYSE: GDPPC) inched up 27 cents, or 41.54%, to 92 cents.

Goodrich is exchanging its outstanding preferreds – including a convertible preferred issue – for new 10% series E convertible cumulative preferreds. On Wednesday, the company extended the swap to Dec. 15 from Dec. 8.

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