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Preferred securities valuation weekly Preferred & hybrid securities recommendations for 26 August 2025

Includes the �۶��Ƶ CIO "Attractive List" of preferred stock and hybrid securities recommendations.

by Frank Sileo 26 Aug 2025

At a glance

Preferred stocks and hybrid securities on the Attractive List are those that we view favorably based on: (1) fundamental credit quality, (2) valuation, and (3) structure (security characteristics).
We may deem these preferred securities to be Unattractive for valuation reasons or because of their structure. From a valuation perspective, preferreds may be here because of negative YTC over the course of the remaining call protection period. Structurally, preferreds may be listed here because (1) they have low fixed-rate coupons and therefore would exhibit greater interest rate or credit spread sensitivity, or (2) they are variable-rate coupons with a low back-end spread.
We deem these currently callable preferreds to be refinanceable, with a material likelihood and meaningful probability of being called at anytime. Traditional relative value measures such as YTC or option-adjusted spread (OAS) are not applicable, since they can result in large, negative values (distorted by annualization).

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