Preferred Securities Market Insight - Battening Down the Hatches

Our preferred securities specialists look back at the market’s performance and provide incisive commentary to help you make sense of what drove the market—and what may be on the horizon for preferred investors.

Key takeaways from the latest edition:

Institutional preferreds outperformed in February, with $1,000-par securities returning roughly 0.85%, compared with 0.49% for the broader preferred market and 0.45% for the $25-par retail segment, though retail preferreds still lead year-to-date (YTD) performance.

Credit spreads widened across markets, particularly in lower-quality segments, as geopolitical risk, private credit concerns and sector-specific developments weighed on risk sentiment.

Artificial intelligence (AI) disruption emerged as a new market theme, shifting focus from infrastructure demand toward the potential impact on business models, particularly within software

Preferred market technicals remain constructive, supported by continued net redemptions in institutional preferreds and steady investor demand for income-oriented assets.