Preferreds finish week strong; Bank of America’s new issue steady; Customers above par

By Stephanie N. Rotondo

Seattle, April 22 – Preferred stocks finished firm for the week, though overall trading activity for Friday was deemed “lame” by one market source.

The Wells Fargo Hybrid and Preferred Securities index closed up 11 basis points.

Recently priced deals remained on the radar. Bank of America Corp.’s $900 million of 6% series EE noncumulative perpetual preferreds were holding in a $25.16 to $25.20 range, according to a trader.

Another source placed the issue at $25.15, steady for the day. He said about 529,000 shares traded during the session.

That issue came Monday via BofA Merrill Lynch.

Customers Bancorp Inc.’s $50 million of 6.45% series E fixed-to-floating rate noncumulative perpetual preferreds – a deal from Thursday’s business – were meantime pegged at $24.95 bid, $25.15 offered early in the day. Paper finished at $25.06, according to a source.

But considering that the deal was small and non-rated, “I’ve got to think that there is some sort of syndicate short priced into that price,” the source said.

The source also noted that the issue had freed from the syndicate.

UBS Securities LLC and Morgan Stanley & Co. LLC led that deal. When declared, dividends will be paid on a quarterly basis at the fixed rate until June 15, 2021. At that time, the rate will float at Libor plus 514 bps.

Looking to the coming week, a trader said he was “hearing there’s an active calendar.”

However, he did not have any specific names.

Oil names rise

As crude prices ended the week with a strong tone – in fact marking its third straight week of gains – oil and gas-linked preferreds were also trending higher.

Legacy Reserves LP’s 8% series A fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYP) traded up $1.41, or 32.72%, to $5.72. The 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) added $1.22, or 27.17%, to close at $5.71.

Those issues were among the day’s top percentage gainers.

Vanguard Natural Resources LLC was also on that list. The 7.625% series B cumulative redeemable perpetual preferred units (Nasdaq: VNRBP) rose 46 cents, or 15.18%, to $3.49, as the 7.875% series A cumulative redeemable perpetual preferred units (Nasdaq: VNRAP) ended up 32 cents, or 7.32%, at $4.69.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) was also climbing upward. The units finished the day 8 cents, or 3.38%, better at $2.45.

For its part, crude prices improved by 1.27% for the day, as strong U.S. gasoline demand and signs of slowing global production encouraged investors.

Also helping matters was new data that showed strong crude imports to China in March.

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