Morning Commentary: Preferred stocks open soft as equities decline; financials mixed

By Cristal Cody

Tupelo, Miss., Oct. 26 – After modest improvement on Thursday, preferreds opened on Friday weaker along with equities in general.

The Wells Fargo Hybrid and Preferred Securities index was down 0.23% over the morning. The index headed out on Thursday up 0.20% after closing down 0.40% on Wednesday and off 0.22% on Tuesday.

The U.S. iShares Preferred Stock ETF slipped 0.40% at the start of the day. The ETF closed on Thursday up 0.61% after ending Wednesday’s session down 0.36% and closing Tuesday 0.30% weaker.

The Dow Jones industrial average dropped 1.86%, the S&P 500 fell 2.69% and the Nasdaq declined 3.4% in early trading on Friday.

In the financial sector on Friday, preferred stocks were mixed.

JPMorgan Chase & Co.’s 5.75% series DD non-cumulative preferred stock (NYSE: JPMPrD) edged up 1 cent, or 0.04%, to $24.98 on an average trading volume of 2.12 million shares.

The preferreds closed Thursday up 13 cents, or 0.52%.

JPMorgan sold $1.7 billion of the $25-par perpetual preferred shares on Sept. 17.

Bank of America Corp.’s 5.875% series HH non-cumulative preferred stock fell 4 cents, or 0.16%, to $24.70 in early trading on about 445,000 shares traded. The preferreds (NYSE: BACPrK) headed out on Thursday down 2 cents, or 0.08%.

Bank of America priced $854 million of the series HH preferreds on July 17 at par of $25.00.

U.S. Bancorp’s 5.5% series K non-cumulative perpetual preferred stock (NYSE: USBPrP) declined 2 cents, or 0.08%, to $24.75 over the morning on volume of about 386,000 shares.

The preferreds priced in a $575 million offering at $25-par on Aug. 7.

New supply has been thin with one issuer in the primary market week to date.

On Monday, Citizens Financial Group, Inc. sold $300 million, or 300,000 shares, of fixed-to-floating rate non-cumulative perpetual preferred stock (BB+/BB-) with a 6.375% dividend. The preferreds will not be listed on any exchange.

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