Morning Commentary: Preferred market continues to bounce back; new Goldman Sachs preferreds rise

By Rebecca Melvin

New York, Feb. 17 – The preferred stock market was bouncing back early Wednesday with common stocks and oil prices in rally mode while bonds were lower, a sellside source said.

“They are slowly moving back to levels seen before the huge sell-off early last week. They have found a bottom,” the source said of preferred stocks.

The Wells Fargo Hybrid and Preferred Securities index was up 0.9% at late morning.

Goldman Sachs Group Inc.’s newly priced 6.3% $25-par noncumulative perpetual preferred stock (NYSE: GSHSP) was higher at $25.02 bid, $25.06 in the early going and last seen at $25.10, which was up from $24.88 bid, $24.90 offered immediately post pricing.

Comparing the new Goldman Sachs security to other Goldman issues, a source said, “It should move up nicely.”

The issue’s upsizing means the bank will tender more of the two series of its $1,000-par automatic preferred enhanced capital securities (Apex) – the 5.793% fixed-to-floating rate Apex and the floating-rate Apex.

Other bank preferreds were also getting some traction, including Deutsche Bank AG’s 7.6% trust preferred securities (NYSE: DKT) and Barclays Bank plc’s 8.125% series T noncumulative callable dollar preference shares.

“They are getting some bounce back. People are still digesting the news over the weekend that Deutsche Bank won’t fail,” a source said.

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