Fed’s ‘non-action’ boosts preferreds; Goodrich preferreds retreat; Wells Fargo active

By Stephanie N. Rotondo

Phoenix, Sept. 18 – Preferred stocks “moved up a little bit because of non-action on the part of the Fed,” a trader said early Friday.

The Wells Fargo Hybrid and Preferred Securities index saw “a slow climb up to 19 basis points [better],” one market source said. The index did give back some of its gains, closing up 13 bps.

On Thursday, the Federal Reserve decided to keep short-term interest rates steady for the time being, citing global economic concerns and recent volatility in domestic markets. And while the decision is seen as a boon to preferred stock issuers – “we will probably start seeing some new issues coming out the beginning of next week,” a trader said – the uncertainty caused the broader equity markets to weaken.

Oil prices also took a hit, given the Fed’s concern about the global markets – which could put even more pressure on oil demand.

Domestic crude prices dropped 4.26% in Friday trading, even as new data showed that active U.S. drilling rigs had declined for the third week in a row.

The decline of the commodity then put pressure on oil and gas names, which have already been struggling amid the weak price environment.

Goodrich Petroleum Corp.’s 10% series C cumulative preferreds (NYSE: GDPPC) ended down 18 cents, or 10.4%, at $1.55. The preferreds were off 11 cents, or 6.4%, at $1.62 at mid-morning.

The 9.75% series D cumulative preferreds (NYSE: GDPPD) were initially down 11 cents, or 6.5%, at $1.58 at mid-morning, but recovered to end unchanged at $1.69.

Magnum Hunter Resources Corp.’s 8% series D cumulative preferred stock (NYSE: MHRPD) meantime dropped $5.75, or 36.28%, to $10.10. That company, however, has failed to deliver news on pending asset sales, making already-nervous investors a little twitchy.

A sale of the company’s Eureka Hunter asset was expected to be announced in late August. There has been no word of how the potential deal is going.

Wells Fargo busy

While overall liquidity remained subdued on Friday, investors continued to be focused on recently priced deals – Wells Fargo & Co.’s $900 million of 6% series V class A noncumulative preferreds (NYSE: WFCPV) in particular.

That issue dominated trading among listed and paying securities for the day, closing up 4 cents at $25.07.

Earlier in the session, a trader had pegged the paper at $25.05.

The deal came Sept. 8 and listed on the New York Stock Exchange on Wednesday.

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