Oct 8, 2026 · 33 min
Preferreds offer income as yields rise and spreads tighten
Talking Markets Podcast Series (Preferreds) with Derek Pines (Bramshill) & Frank Sileo (UBS CIO)
Preferred securities sit between attractive income and meaningful exposure to rates, volatility, liquidity, and bank issuance.
- 1Rising Treasury yields and shifting Federal Reserve expectations pressured preferreds through duration and valuation effects.
- 2Retail and institutional investors shape a market whose liquidity, denominations, and pricing dynamics differ from conventional bonds.
- 3Current coupons and real yields look attractive, but tight spreads make security selection and positioning increasingly important.
Don't miss
Derek Pines explains how attractive coupons and real yields can coexist with tight spreads, making positioning and security selection decisive.
The brief
UBS’s Frank Sileo and Bramshill portfolio manager Derek Pines frame preferred securities against rising Treasury yields, changing Federal Reserve expectations, and a difficult year for fixed income.
Preferreds behave differently from conventional bonds because retail and institutional investors, security denominations, and uneven liquidity all influence pricing and market structure.
Banks still dominate issuance, while redemptions, regulation, and capital needs are reshaping the available opportunity set across the market.
Pines’s quantitative models compare multiple durations and asset classes, weighing attractive coupons and real yields against relatively tight spreads.
The discussion closes on newer hybrid securities, including structures with coupon floors, as possible ways to improve risk-reward across preferreds and adjacent credit markets.
The episode’s central tension is clear: preferreds offer income in a volatile rate environment, but investors must be selective when valuations are not broadly cheap.