What is the likely effect on the yield and pricing of United Community Banks' remaining preferred securities?

Fundamental view

United’s decision to redeem the entire 6.875 % Series I perpetual preferred issue removes an $88 million layer of non‑cumulative preferred capital and frees up cash on the balance sheet. By stripping out that tranche, the company’s overall preferred‑capital structure becomes tighter and its credit profile improves – a point that most credit‑focused investors will reward with a higher price on the remaining preferred securities (Series A, B, etc.). Because the redemption is being paid at the fixed $25 000 per share (i.e. $25 per depositary share) and is funded from cash on hand, there is no “forced‑sale” discount; the market will treat the remaining series as a scarcer, higher‑quality asset.

Yield‑pricing impact

For a preferred security, yield ≈ coupon ÷ price. With the supply of preferred shares shrinking and the perceived credit risk falling, demand for the still‑outstanding series should rise, pushing their market price toward or even above the $25 par level. As the price climbs, the effective yield on those securities will compress (i.e., fall). In other words, investors can expect higher prices and lower yields on United’s remaining preferred securities until the market re‑balances the coupon to a new, lower‑yield equilibrium.

Trading implications

• Long the remaining preferreds: The premium‑price move creates a short‑duration, low‑volatility upside as the series trade up on the redemption news.
• Yield‑curve positioning: Anticipate a modest yield‑drop (5‑10 bp) on the surviving series; if you hold a yield‑sensitive position, consider trimming exposure or hedging with a short‑duration bond or a credit‑default swap.
• Liquidity watch: The redemption will clear the Series I order book, so any residual liquidity in the preferred market may thin out. Keep an eye on bid‑ask spreads; a sudden squeeze could present a brief entry point for a buy‑the‑dip if the price over‑corrects.

Overall, United’s capital‑structure cleanup should translate into price appreciation and yield compression for the remaining preferred securities, offering a short‑to‑medium‑term bullish case for a long position in those series.