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Morning Commentary: Oil prices bounce, push up energy preferreds; new deals continue to trade well
By Stephanie N. Rotondo
Seattle, May 12 – The preferred stock market was trending higher on Thursday, following along with the broader markets.
The Wells Fargo Hybrid and Preferred Securities index was up 4 basis points at mid-morning.
Yet another gain in crude oil was also helping energy sector preferreds inch upward.
“Oil continues to eke up here,” a trader said.
Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were up 7.45 cents, or 7.23%, at $1.1045 in early trading. The rally came after two days of hefty losses following the company’s earnings release late Monday.
Legacy Reserves LP’s 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) were meantime 15 cents, or 2.77%, better at $5.56.
For its part, domestic crude was up nearly 1% at mid-morning, ticking up toward $47 a barrel – a new 2016 high. The gains came as the International Energy Administration said demand was increasing, while production was slowing.
Recently priced deals were also in focus during the session. A trader said that he “thought we were going to see a deal today,” but as none had been announced, he opined the pipeline would be closed until Monday.
Public Storage’s $200 million of 5.125% series C cumulative preferreds were seen offered at par. The issue priced Tuesday and is trading under a temporary ticker, “PBBSP.”
DuPont Fabros Technology Inc.’s $175 million of 6.625% series C cumulative redeemable preferreds were meantime pegged at $25.02 bid, $25.05 offered. That issue also priced Tuesday.
And, Sunstone Hotel Investors Inc.’s $75 million offering of 6.45% series F cumulative redeemable preferred stock – yet another issue from Tuesday’s business – were at $25.20 bid, according to a trader.
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