Preferreds down again as week ends; Oil names sink; Resource Capital weakens

By Stephanie N. Rotondo

Seattle, Jan. 15 – The preferred stock market declined again on Friday as a slew of fresh economic data dragged down the broader markets.

“The stock market is getting crushed and oil is down,” a trader noted. “We’ve got a sell-off in a lot of issues.”

Still, the trader added that liquidity was on the lighter side – at least, it was earlier in the session, though it did pick up by day’s end – leading him to opine that “it could be a lot worse I guess.”

The Wells Fargo Hybrid and Preferred Securities index closed down 24 basis points. That was a bit of an intraday recovery, as the index was down at least 50 bps shortly before the market closed.

Oil’s downward spiral was meantime pushing energy-linked paper further into the red.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were down $1.31, or 22.55%, at $4.50. Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) weakened $1.61, or 36.67%, at $2.78.

As the market drifted down, a trader said “BDCs and mortgage REITs are getting smoked today,” due to the fact that banks have been warning that mortgage units have not fared so well. As such, names like Resource Capital Corp. have been pressured.

Resource Capital’s 8.625% fixed-to-floating rate series C cumulative redeemable preferreds (NYSE: RSOPC) were off 71 cents, or 4.41%, at $15.40.

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