10 Year Treasuries Versus Investment Grade Perpetual Preferreds

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We constantly receive questions about what affect interest rates have on preferred stock prices. In a general sense we can address this question for perpetual preferreds.  Even though we have read investor speculation that interest rates do not effect fixed income type securities there should be no question that there is a very pronounced relationship and for those that doubt that is the case we feel some level of pity.  While the results of higher interest rates on fixed income securities likely will not match the decimation that occurred in the upstream MLP sector in the last year it can be very meaningful and one should be prepared simply so there are as few surprises as possible.


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