Historic Rout Hits Preferred Stocks in Banking Industry.

Investors are selling preferred shares at a historic rate due to concerns about the health of US regional banks, leading to one of the biggest sell-offs since the global financial crisis. Preferreds are popular with banks because they help meet capital requirements without diluting shareholders, but the market is being upended by a selloff fueled by regional bank failures. The illiquid market has become difficult to navigate, with big gaps appearing in prices from day to day. While some investors see opportunity in the wreckage, others are concerned about the impact on smaller lenders who rely on preferred shares to fulfill regulatory requirements.