Oil prices slide, weigh on energy sector; Triangle Capital preferreds upsized; Ally active

By Stephanie N. Rotondo

Phoenix, Feb. 4 – Preferred stocks were reversing direction Wednesday, and the Wells Fargo Hybrid and Preferred Securities index dropped 14 basis points.

The decline came as oil prices stemmed a recent rally and the European Central Bank cut off funding for Greece.

As to the latter issue, the ECB said its decision was based on concerns the government would not make good on its pledges.

In oil, West Texas Intermediate crude erased all of the previous day’s gains, falling $4.15, or 7.82%, to $48.90 a barrel. Brent crude lost $3.14, or 5.42%, ending at $54.77.

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 “ridiculousy 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) closed down 23 cents, or 1.05%, at $21.74. Vanguard’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) fell 35 cents, or 1.16%, to $21.50.

In Goodrich Petroleum Corp. preferreds, the 10% series C cumulative preferreds (NYSE: GDPPC) dropped $1.14, or 12.19%, to $8.21, as the 9.75% series D cumulative preferreds (NYSE: GDPPD) declined 59 cents, or 6.65%, to $8.28.

The drop in oil prices was attributed to a fresh report out from the Energy Information Administration, which showed that U.S. crude stockpiles increased 6.3 million barrels last week – the fourth week in a row the data point has gained ground. That brings the total stockpile up to 413.06 million barrels, the highest level seen since the government began keeping track in 1982.

Triangle prices baby bonds

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.

Triangle Capital is a Raleigh, N.C.-based specialty finance company.

Ally remains active

Ally Financial Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPA) continued to be actively traded following news out late Monday regarding the departure of Michael A Carpenter, the company’s chief executive officer.

However, unlike in the previous session when the shares ended weaker, the preferreds managed to finish steady at $26.29. The 8.5% series A fixed-to-floating rate perpetual preferreds (NYSE: ALLYPB) were even able to put on 2 cents to close at $26.25.

The Detroit-based lender said in a statement late Monday that Jeffrey J. Brown was succeeding Michael A. Carpenter as CEO, effective immediately. In the statement, Carpenter asserted that it was “the right time” for him to step down from his role, given that under his watch, the company completed its initial public offering and repaid the bailout funds received under the Troubled Asset Relief Program.

However, a market source said the news was “a little bit of a surprise,” as the company gave no hint of Carpenter’s exit in its earnings call last week.

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