Preferreds firm early, then drift lower; Five Oaks planning add-on; BreitBurn units gain

By Stephanie N. Rotondo

Phoenix, May 21 - The midweek session started strong for the preferred stock market.

The Wells Fargo Hybrid and Preferred Securities index was up 6 basis points at mid-morning.

However, the index began to decline shortly thereafter and continued to do so even as the Federal Reserve released its minutes from its latest monthly meeting.

The index closed down 6 bps to 7 bps.

Still, a trader said it was "horribly quiet," further opining that the remaining trading days would be worse as desks operated with a "skeleton crew" ahead of the Memorial Day holiday.

"Other than a couple issues, volume was pretty light overall," another market source said.

Those issues were American Realty Capital Properties Inc.'s 6.7% series F cumulative redeemable preferreds (Nasdaq: ARCPP) and Goldman Sachs Group Inc.'s 6.375% series K fixed-to-floating rate noncumulative preferreds (NYSE: GSPK), both of which saw trading of over 1.5 million shares apiece.

The American Realty preferreds ended down 19 cents at $23.63, and Goldman's Ks were off 3 cents at $25.64.

Goldman's 5.5% series J fixed-to-floating rate noncumulative preferreds (NYSE: GSPJ) were also on the busier side, with about 815,000 shares being exchanged.

The issue finished the day at $23.90, unchanged.

Five Oaks Investment Corp. said Wednesday that it was reopening its 8.75% series A cumulative redeemable preferreds.

The company originally sold $20 million of the preferreds in December.

The paper (NYSE: OAKSPA) was trading down 46 cents, or 1.79%, to $24.99 in early trading. It closed down 36 cents, or 1.41%, at $25.09.

In the add-on offering, Keefe Bruyette & Woods Inc. is acting as the bookrunner. BTIG LLC, Ladenburg Thalmann & Co. Inc. and Mitsubishi UFJ Securities (USA) Inc. are the co-managers.

Meanwhile, BreitBurn Energy Partners LP's 8.25% series A cumulative redeemable preferred units continued to move higher, according to a trader.

The trader saw the issue trading in a par to $25.10 range.

The deal, which came May 14, could list next week, the trader speculated.

Looking forward to next week, a source said the earliest a new issue will come is Tuesday, as the current week will essentially be shut down ahead of the upcoming holiday. However, he said the pipeline would open up "more likely on Wednesday."

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