Preferreds up in early trades, erase gains by the bell; oil volatility moves preferreds

By Stephanie N. Rotondo

Seattle, Dec. 9 – After posting modest gains in early trading, the preferred stock market retreated again during the midweek session.

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

The Wells Fargo Hybrid and Preferred Securities index finished down 3 basis points, after being up 6 bps at mid-morning. For its part, domestic crude oil prices closed slightly lower, though they were up over 1% earlier in the day, nearing $38 a barrel.

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

Around midday, the U.S. Energy Information Administration released its weekly stockpile report, which showed that crude oil inventories declined by 3.6 million barrels last week.

Analysts polled by Reuters had forecast a 300,000-barrel build for the week.

However, distillate inventories increased by 5 million barrels, which was double what was forecast and the biggest build up seen since January.

All the while, seasonal demand fell to its lowest point since 1998.

As the commodity price gyrated, so did preferreds linked to it.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) weakened by 38 cents, or 6.34%, to $5.61. At mid-morning, the units were up 64 cents, or 10.68%, at $6.63.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) also fell, dropping just a penny to $6.38. In earlier trading, the units were up 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 off 50 cents, or 7.35%, at $6.30. That issue was up 21 cents, or 3.09%, at $7.01 at mid-morning.

Among non-paying issues, Goodrich Petroleum Corp.’s 10% series C cumulative preferreds (NYSE: GDPPC) did manage to end higher, though the issue gave back a portion of the gains. The preferreds closed up 13 cents, or 20%, at 78 cents.

The issue was initially up 27 cents, or 41.54%, at 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.

REITs on the rise

Real estate investment trust preferreds were trading actively and better on Wednesday.

A market source speculated that the activity was likely due to a “REIT specialist in the market probably taking gains.

“Fund managers don’t want to take losses, but they also don’t want to report capital gains either at year-end,” he said.

Regency Centers Corp.’s 6.625% series 6 cumulative redeemable preferreds (NYSE: REGPF) ended up 3 cents at $26.17. Apartment Investment & Management Co.’s 6.875% class A cumulative preferreds (NYSE: AIVPA) closed a penny higher at $25.81.

In Public Storage, the 6.35% series R cumulative preferreds (NYSE: PSAPR) improved 9 cents to $26.04.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.