Lower oil demand forecast hits oil, gas preferreds; TravelCenters’ $25-par notes firm

By Stephanie N. Rotondo

Phoenix, Dec. 12 – Preferred stocks were edging lower in Friday trading after experiencing a rebound in the previous session.

However, a market source noted that volume was “super, super light.”

The previous day’s gains were due to a round of positive economic data, including a decline in jobless claims and a rise in retail sales. There was also some good news out Friday – that consumer confidence was rising, for instance – but that didn’t seem to have as much impact as the previous day’s data points.

Instead, news that the International Energy Agency cut oil demand forecasts for 2015 – the fourth time in five months – was putting pressure on the market.

Oil prices continued to weaken on the heels of that news. As such, oil and gas preferreds were trending lower yet again.

Goodrich Petroleum Corp.’s bellwether 9.75% series D cumulative preferreds (NYSE: GDPPD), for example, were off 18 cents, or 2.18%, trading around $8.07. However, that was better than the $8.00 opening level.

Vanguard Natural Resources LP’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) meantime declined 83 cents, or 4.96%, to $15.91.

The 7.875% series A cumulative redeemable preferred units (Nasdaq: VNRAP) declined 96 cents, or 5.14%, to $17.72.

As for oil prices, West Texas Intermediate crude hit a fresh five-year low, losing $2.11, or 3.52%, to close at $57.84 per barrel. Brent crude dropped $1.91, or 3%, to $61.77.

While most of the market was feeling the burn, TravelCenters of America LLC’s $120 million of 8% $25-par senior notes due 2029 continued to improve.

A trader pegged the notes at $24.85 bid. Another source saw the issue at $24.83 – still higher than the $24.75 level seen at Thursday’s close.

The deal came Tuesday via Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets LLC and UBS Securities LLC and freed to trade on Wednesday.

Overall, the Wells Fargo Hybrid and Preferred Securities index finished the day down 9 basis points. The index was trading off 2 bps early in the session.

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