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Morning Commentary: Preferreds soft to start week; oil prices weigh on sector; recent deals list
By Stephanie N. Rotondo
Seattle, Feb. 1 – The preferred stock market was starting out the month with a weaker tone amid weak economic data from China and renewed declines in oil prices.
The Wells Fargo Hybrid and Preferred Securities index was off 10 basis points at mid-morning.
A new report showed that manufacturing in China contracted at the highest rate in the last four years. That news, combined with reports that any production cuts will likely not come soon, pushed crude oil prices down as much as 5% in early trading.
In turn, oil and gas-linked preferreds were waning.
Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) fell $1.13, or 15.21%, in early trading to $6.30. Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) meantime dipped 37 cents, or 6.17%, to $5.61.
Elsewhere, recently priced issues from Bank of America Corp. and Wells Fargo & Co. began trading on the New York Stock Exchange on Monday.
Bank of America’s $1 billion of 6.2% series CC non-cumulative perpetual preferred stock began trading under the ticker “BACPC.” Wells Fargo’s $875 million issue of 5.7% series W class A noncumulative perpetual preferred stock then listed under the symbol “WFCPW.”
Bank of America’s preferreds priced on Jan. 21. Wells Fargo priced its offering on Jan. 19.
A trader quoted the Bank of America issue at $25.38 bid, $25.40 offered in early trading. Wells Fargo was pegged at $25.35.
Looking ahead, a trader said he was hearing rumors of a possible deal from a regional bank, though he didn’t know specific details.
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