“Concerns Grow Over Health of US Regional Banks as Investors Sell Off Preferred Stock”

Investors are letting go of preferred stock at a historic pace. The reason for this is growing concerns about the health of U.S. regional banks.

$12.2 billion (approximately ¥1.64 trillion) iShares Exchange Traded Fund linked to the preferred securities market (ETF) fell 5.1% on a weekly basis last week. It was the biggest drop since the global financial crisis.

Preferred shares, a type of hybrid security, are popular among banks because they help meet capital requirements without dilution. However, the market changed completely due to the sell-off triggered by the bankruptcy of a regional bank.

Bank preferred stock issuance is at its lowest level since 2018, making it difficult to trade in the secondary market, asset managers say.

“There doesn’t seem to be much confidence in the market,” said Allen Hassan, head of preferred stock trading at Ziegler Capital Markets.

news-rsf-original-reference paywall">Original title:Preferreds Get Burned in Historic Rout Spreading From Banks(excerpt)