Morning Commentary: Oil prices slide, weighing on energy sector; Triangle Capital deal upsized

By Stephanie N. Rotondo

Phoenix, Feb. 4 – Preferred stocks were reversing direction in early trading on Wednesday, and the Wells Fargo Hybrid and Preferred Securities index was down 7 basis points.

The decline came as oil prices stemmed a recent rally.

West Texas Intermediate crude was down 4% at mid-morning, while Brent crude had dropped almost 3%.

With the dip in oil prices, energy preferreds were also weakening. A trader noted that Seeking Alpha had published some articles on Breitburn Energy Partners LP and Vanguard Natural Resources LLC that said those companies’ bonds were “ridiculously cheap to the preferreds.”

“It should be the other way around,” he said, adding that Breitburn was recently downgraded by Credit Suisse and Vanguard by Barclays.

Breitburn’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were off 27 cents, or 1.23%, in early trading at $21.70. Vanguard’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were down 25 cents, or 1.14%, at $21.60.

In the primary, Triangle Capital Corp. brought $75 million of 6.375% $25-par notes due 2022.

The deal was originally slated to be $50 million, talked at 6.375% to 6.5%.

Keefe Bruyette & Woods Inc., Raymond James & Associates Inc., BB&T Capital Markets and Janney Montgomery Scott LLC were the joint bookrunners. JMP Securities LLC, Sterne Agee & Leach Inc. and Wunderlich Securities Inc. were the co-lead managers.

A trader quoted the issue at $24.85 bid, par offered.

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