Preferreds take a beating; Wells Fargo Real Estate prices $240 million 6.375% preferreds

By Stephanie N. Rotondo

Phoenix, Dec. 4 – Preferred stocks were getting beat up again in Thursday trading.

The Wells Fargo Hybrid and Preferred Securities index closed off 47 basis points. The index was down 28 bps at mid-morning.

In the past few sessions, the market looked to be ticking higher in the morning. But by midday, the space would start to trade off and would eventually finish soft.

Come Thursday, however, there was no wishy-washy moves, just a steady decline.

Overall, a trader said trading was “pretty quiet.” He noted that in the secondary, oil and gas exploration and production names were more volatile than some other sectors.

For instance, Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) fell $2.90, or 22.04%, to $10.26.

The $130 million issue – $148 million including an $18 million greenshoe – priced Aug. 14, 2013.

“You have to think about what’s going on with oil tight now,” one market source said.

For sure, oil prices have been on the decline of late, and Thursday was no different. West Texas Intermediate (WTI) crude oil dropped 67 cents to $66.71 per barrel, while Brent crude dropped 47 cents to $69.45.

But investors did seem to be intrigued with a new deal being shopped by Wells Fargo Real Estate Investment Corp.

The new issue priced late in the day, with $240 million of the series A cumulative perpetual preferreds being sold at par to yield 6.375%.

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