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Morning Commentary: Oil and gas preferreds mixed as commodity prices remain weak; Prospect frees
By Stephanie N. Rotondo
Seattle, Dec. 8 – The preferred stock market remained under pressure on Tuesday, driven in large part by a slumping oil market.
“Oil and gas was smashed yesterday on the Saudi’s comments that they are going to pump until everybody else goes out of business,” a trader said.
In Tuesday trading, domestic crude was trading with a $37 handle at mid-morning, though it had been trading south of that mark earlier in the day.
Among oil and gas preferreds, the results were a little mixed.
Goodrich Petroleum Corp.’s 10% series C cumulative preferreds (NYSE: GDPPC) were up 2 cents, or 2.94%, at 70 cents at mid-morning. But Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were down a quarter, or 3.7%, at $6.50.
For its part, Goodrich suspended the dividends on all of its preferred issues – including a convertible preferred issue – on Dec. 1.
Among recently priced deals, a trader said Prospect Capital Corp.’s $150 million of 6.25% $25-par notes due 2024 – a deal priced Thursday – had freed to trade, quoting the issue at $24.75 bid, $24.80 offered.
“They are moving up nicely even in the face of this [weak] market,” the trader said.
As for coming deals, a trader said a $50 million offering of series A cumulative redeemable preferred stock from Cherry Hill Mortgage Investment Corp. was expected to price Tuesday.
Price talk on the non-rated deal is around 9%, he said.
The trader noted that he had not seen any markets for the paper, adding “I don’t think it is going to do very well.”
Morgan Stanley & Co. LLC, UBS Securities LLC, Keefe, Bruyette & Woods Inc. and Citigroup Global Markets Inc. are running the books.
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