Morning Commentary: Preferreds firm to end week; Sunstone prices; recent deals stay in focus

By Stephanie N. Rotondo

Seattle, March 4 – Preferred stocks were ticking higher early Friday following a U.S. jobs number that was better than expected.

The Wells Fargo Hybrid and Preferred Securities index was up 9 basis points at mid-morning.

The latest report from the Labor Department showed non-farm payrolls increasing by 242,000 in February. Additionally, December and January figures were revised to include another 30,000 new jobs.

Market watchers had been predicting an addition of 190,000 last month.

“In the wake of the report, a trader said “people are kind of taking risk off on fixed-rate issues.” He noted that fixed-to-float issues, as well as $1,000-pars, were inching upward.

Sunstone Hotel Investors Inc. capped the week’s final trading session by pricing a new issue, a $115 million offering of 6.95% series E cumulative redeemable preferreds.

Initial price talk was 7%, a market source said on Thursday after the deal was first launched.

Post-pricing, a trader saw the issue at $24.85 bid.

Among other deals from the week, BB&T Corp.’s $425 million of 5.625% series H noncumulative perpetual preferreds – a deal priced Wednesday – were seen around $24.80 by a trader.

Another source placed the issue at $24.88 in early trading.

The issue is trading under a temporary ticker symbol, “BBTTP.”

And, from Tuesday’s business, Southern California Edison Co.’s SCE Trust V’s $300 million of 5.45% fixed-to-floating rate trust preference securities were pegged at $25.45.

Looking ahead, a trader said the new issue pipeline was expected to keep flowing.

“I am hearing we are going to have a very active week next week,” he said.

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