Market ‘flat’; energy preferreds firm up as oil prices rise; Triangle greenshoe exercised

By Stephanie N. Rotondo

Phoenix, Feb. 13 – The preferred stock market ended Friday’s session “flat, essentially,” according to a market source.

The source said the space was up a couple cents for most of the day but then “faded in the last hour.”

The Wells Fargo Hybrid and Preferred Securities index closed down 5 basis points.

Another trader said early dealings were “mixed,” as another oil price rally was helping names like Vanguard Natural Resources LLC “bounce back a little bit.”

“But besides that, everything’s pretty flat,” he said.

West Texas Intermediate crude rose $1.33, or 2.6%, to $52.54 a barrel, while Brent crude jumped $2.08, or 3.51%, to $61.36 – the first time the commodity has traded over $60 in months.

In response, Vanguard’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were initially up 13 cents at $21.87 but ultimately ended unchanged at $21.74.

Regions Financial Corp.’s 6.375% series B fixed-to-floating rate noncumulative preferreds (NYSE: RFPB) – a financial institution with exposure to the oil industry – were also on the rise, ending up a penny at $25.21.

Meanwhile, Triangle Capital Corp. said it had exercised a greenshoe on its $75 million offering of 6.375% $25-par notes due 2022, increasing the size to $86.25 million.

The deal priced Feb. 4.

On the news, the notes first traded up 2 cents to $25.19 but closed steady at $25.17.

CCAR, stress tests coming

The Federal Reserve announced Thursday that it would release stress test results for U.S. banks on March 5 at 4:30 p.m. ET.

The Comprehensive Capital Analysis and Review (CCAR) will be published March 11, also at 4:30 p.m. ET.

In terms of the preferred market, a market source said the results “will clearly impact supply – the stress test not as much as the CCAR.”

In his opinion, new issuance from banks has stalled because most issuance over the last year was done based on the CCAR results from 2014 – and most banks have used up what they were previously approved for.

As such, the CCAR results “may give an indication” of what banks will be issuing over the next year.

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