Midday Commentary: Fiscal cliff deal boosts preferred stocks on first trading day of 2013

By Stephanie N. Rotondo

Phoenix, Jan. 2 - The preferred stock market was on the rise Wednesday, the first trading session of 2013.

"Since they fixed the cliff issue, preferreds have jumped up here," one trader noted, referring to a last-minute deal on the fiscal cliff that avoided across-the-board tax increases and massive spending cuts.

The trader also pointed out that uncertainty over dividend taxation was cleared up, as the rate increased to 20% from 15%.

"That's kind of what everyone expected," he said, adding that it wouldn't deter the continued hunt for yield in the preferred arena.

And, with the dividend tax question answered and interest rates expected to stay at current low levels, the new issue calendar should be jam-packed in 2013, the trader opined.

"It'll probably start up next week," he speculated.

As for the day's dealings, Suntrust Banks Inc.'s 5.875% series E noncumulative perpetual preferreds were "finally" gaining ground," according to a trader.

He quoted the issue - which priced Dec. 13 - at $24.64 bid, $24.68 offered.

The issue listed on the New York Stock Exchange late last week. The ticker symbol is "STIPE."

© 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.