Morning Commentary: Oil prices help push preferred stocks higher; housing, energy names rally

By Christine Van Dusen

Atlanta, Jan. 22 – The preferred stock market moved higher on Friday as the European Central Bank’s stimulus plans helped hoist oil prices above $31, a move that improved investor sentiment.

“People are no longer scared of their shadows; that's a good thing,” a trader said. “Everything is moving up nicely.”

Energy-linked paper, which rebounded on Thursday, continued to climb on Friday morning. Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) moved up 42 cents to $4.70. Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were up 50 cents to $3.96.

In other trading on Friday morning, the new issue of preferreds from Bank of America Corp. – $1 billion 6.2% non-cumulative perpetual preferred stock, series CC, that priced at par of $25.00 on Thursday – hovered at about $24.90, the trader said.

The issue included 40 million depositary shares, each representing a 1/1,000th interest in a share of non-cumulative preferred stock.

The preferreds are expected to be listed on the New York Stock Exchange under the symbol “BAC PrC.”

BofA Merrill Lynch was the bookrunner. Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, UBS Investment Bank and Wells Fargo Securities LLC were the joint lead managers.

CastleOak Securities LP, Lebenthal & Co., Mischler Financial Group, Multi-Bank Securities, Samuel A. Ramirez & Co. and Williams Capital Group were the junior co-managers for the Securities and Exchange Commission-registered deal.

Housing names rebounding

Housing-related names, which got pummeled on Wednesday and bounced back on Thursday, moved higher again on Friday.

Resource Capital Corp.'s 8.625% fixed-to-floating rate series C cumulative redeemable preferreds (NYSE: RSOPC) were up 87 cents to $15.14 on Friday morning.

Wells Fargo trades

In other trading, the new issue of preferreds from Wells Fargo & Co. – $875 million 5.7% non-cumulative perpetual class A preferred stock, series W, that priced at par of $25.00 on Tuesday – traded at about $25 on Friday morning, a trader said.

The issue included 35 million depositary shares, each representing a 1/1,000th interest in a share of non-cumulative perpetual class A preferred stock.

There is a $125 million over-allotment option. The preferreds are callable on any interest payment date beginning March 15, 2021 at par plus accrued dividends.

Wells Fargo was the bookrunner. The joint lead managers were Citigroup, Goldman Sachs, JPMorgan, BofA Merrill Lynch, Morgan Stanley, RBC Capital Markets and UBS Securities LLC.

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