Magnum Hunter preferreds decline amid crude’s price plunge; Southern gyrates ahead of earnings

By Stephanie N. Rotondo

Seattle, Oct. 27 – Oil and gas preferreds were getting smacked down Tuesday as ongoing supply glut concerns pushed crude oil prices down as much as 2.5%.

Domestic oil eventually settled down 1.8%.

Also weighing on the commodity’s price was news that federal lawmakers had reached a budget deal late Monday. Under the terms of the deal, the United States would sell off some of its inventory in the Strategic Petroleum Reserve between 2018 and 2025.

If the proposed bill is officially approved by lawmakers, the sale will equate to about 8% of the country’s stockpiles. Proceeds would be deposited into the Treasury’s general fund.

In the wake of the news, names like Magnum Hunter Resources Corp. took a dive.

The company’s 8% series D cumulative preferreds (NYSE: MHRPD) dropped $1.10, or 26.09%, to $1.57. The 10.25% series C cumulative perpetual preferreds (NYSE: MHRPC) weakened 90 cents, or 23.75%, to $2.89.

Overall, the preferred market finished with a mildly softer tone, though a market source said “volume was better but still low.”

The Wells Fargo Hybrid and Preferred Securities index closed down 4 basis points.

“People are still looking at where all the economic figures are and what the Fed is going to do,” a trader said. “It’s still a ‘state of the economy’ sort of thing.”

As for the central bank and its plans for interest rates, the trader said he “wouldn’t be surprised” if liftoff was pushed back into 2016. However, he opined that any action would have to be taken in the first quarter “or else they run into the elections.”

Southern firms, Goldman slips

Southern Co.’s 6.25% series 2015A junior subordinated notes due 2075 (NYSE: SOJA) traded actively Tuesday ahead of the company’s earnings release on Wednesday.

The notes closed up 4 cents at $26.09. However, the paper had been weaker earlier in the day, opening off 2 cents at $26.03.

For the third quarter, the Atlanta-based electric utility is expected to post earnings per share of $1.15 on revenue of $5.73 billion.

Meanwhile, Goldman Sachs Group Inc.’s 6.125% $25-par notes due 2060 traded off 2 cents to $24.98.

The New York-based investment bank is redeeming the issue on Nov. 1 at par plus accrued interest. The redemption was first announced Oct. 16.

© 2015 Prospect News.
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