Preferred stocks rally as China cuts rates; SoCal Edison, Capital One deals set to list

By Stephanie N. Rotondo

Phoenix, Aug. 25 – Preferred stocks rebounded in Tuesday trading even as the broader markets gave up all of their early gains.

The rally came after China’s central bank said it cut its one-year lending rate, a move aimed at bolstering liquidity and supporting the economy. The bank made the decision to cut rates following heavy losses in the Asian markets, which then bled into the global markets on Monday, causing hefty losses in U.S. equities.

A rebound in crude oil prices was also pushing things up. Benchmark crude had dropped over 5% in Monday trading but finished up more than 2% on Tuesday.

The Wells Fargo Hybrid and Preferred Securities index closed 52 basis points higher. The index was up 34 bps at mid-morning.

Southern California Edison Co.’s SCE Trust IV’s $325 million of 5.375% fixed-to-floating rate trust preference securities finished the session at $24.95, down 8 cents day over day but up 10 cents from Tuesday’s open. But the paper moved in a wide range, hitting lows of $24.76 and highs of $25.20.

A market source said the issue – which came Aug. 17 – will begin trading on the New York Stock Exchange on Wednesday under the symbol “SCEPJ.”

Capital One Financial Corp.’s $500 million of 6.2% fixed-rate series F noncumulative preferreds – another deal from Aug. 17 – are also expected to list Wednesday, according to the source.

The ticker symbol will be “COFPF.”

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