Preferreds start 2012 off strong; Financials head upward on 'better sentiment'; REITs falter

By Stephanie N. Rotondo

Portland, Ore., Jan. 3 - Preferred stocks were trending higher on Tuesday, the first trading day of 2012.

"Everything is up," a trader said. However, he also remarked that the gains were not driven by fundamentals or news.

"At least it's green today," he quipped.

"What exactly is causing that? That's a good question. It's not so clear," another market source said of the upward move.

While volumes were on the lighter side, financials in particular were benefiting from the positive tone. ING Groep NV was on the active side and better, as was Bank of America Corp. and Barclays Bank plc.

Real estate investment trusts, however, were not faring as well. SL Green Realty Corp. and Apartment Investment and Management Co. both traded actively but lower, leaving a source to speculate that someone was "repositioning."

Financials improve ...

ING Groep's preferreds "have been among the more active" securities in the last month, according to a market source, and that trend continued during the first trading session of 2012.

As there was "better sentiment among financials," another trader said, ING preferreds were also heading into higher territory.

The 7.375% perpetual hybrid capital securities (NYSE: IDG) rose 30 cents, or 1.63%, to $18.73, and the 6.375% perpetual hybrids (NYSE: ISF) gained 29 cents, or 1.73%, to close at $17.03.

Among other financials, Bank of America's 8.2% series H depositary shares (NYSE: BACPH) improved by 49 cents, or 2.22%, to $22.59. Barclays' 8.125% series 5 noncumulative callable dollar preference shares (NYSE: BCSPD) increased 52 cents, or 2.33%, to $22.80.

MetLife Inc.'s 6.5% series B noncumulative preferreds (NYSE: METPB) climbed 27 cents, or 1.06%, to $25.75.

... while REITs are punished

While financials were getting boosted, REITs were coming under pressure.

SL Green's 7.875% series D cumulative redeemable preferreds (NYSE: SLGPD) fell 26 cents, or 1.02%, to $25.11, in active trading. Apartment and Investment Management's 7.75% class U cumulative preferreds (NYSE: AIVPU) were also trading actively, but they fell 4 cents to $25.10.

"It might be credit news," a market source said, referring specifically to SL Green's losses. "But it's probably more somebody just repositioning their portfolio at the beginning of the year."

With Apartment and Investment Management and other REITs also losing ground, he further opined that it could be a REIT fund jockeying around.

"It could be somebody who doesn't like what is going on in the REIT industry," he said, adding that it might also be a delayed response to old news.

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