Morning Commentary: Preferred stock market remains under pressure; Citigroup, Wells Fargo weaken

By Stephanie N. Rotondo

Seattle, Nov. 10 – The preferred stock market once again was experiencing “quite a decent sell-off in secondary issues,” a trader said early Thursday.

Preferreds got slammed on Wednesday in the wake of the U.S. election results that gave Donald Trump, the Republican nominee, the presidency. That trend continued into Thursday.

However, in addition to the election upset, a trader commented that “a lot of stuff went ex-dividend, so that is throwing off prices as well.”

The Wells Fargo Hybrid and Preferred Securities index was down 58 basis points at mid-morning. The index lost 87 bps on Wednesday.

In early trading, Citigroup Inc.’s 6.875% series L noncumulative preferreds (NYSE: CPL) were off 20 cents at $26.14, while Wells Fargo & Co.’s 5.5% series X class A noncumulative preferreds (NYSE: WFCPX) dipped 17 cents to $24.75.

HSBC Holdings plc’s 8% exchangeable perpetual subordinated capital securities (NYSE: HSEB) were meantime 3 cents weaker at $25.97.

Deutsche Bank AG’s 7.6% trust preferreds (NYSE: DTK) were bucking the overall trend, rising 29 cents, or 1.23%, to $23.90.

Fannie Mae and Freddie Mac preferreds were also continuing to gain ground, as the market speculates that Trump might allow the GSEs’ to recapitalize, thereby reducing taxpayer risk.

Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were up 36 cents, or 7.33%, at mid-morning, trading at $4.86.

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