Preferreds drift downward; BofA, Citigroup report weak earnings; Wells Fargo taps market

By Stephanie N. Rotondo

Phoenix, Jan. 15 – Preferred stocks were slipping Thursday following the Swiss central bank’s decision to drop its cap on the Swiss franc to the euro.

It was not helping that both Bank of America Corp. and Citigroup Inc. reported fourth-quarter results that “sucked,” according to a trader.

The Wells Fargo Hybrid and Preferred Securities index closed down 5 basis points. The index was down 18 bps at mid-morning.

A market source noted that “volume was improved.”

BofA’s profit declined 9% during the quarter, missing analysts’ estimates. The weaker earnings were attributed in part to a decline in mortgage banking and trading revenues.

Citigroup meantime saw its profit drop to $350 million from $2.5 billion the year before, spurred by hefty legal fees and a decline in trading revenue.

On the heels of the earnings, BofA’s preferreds were fairly mixed early in the day but finished mostly weaker. In Citigroup’s preferreds, all of the structure was under pressure.

Back in the primary, Wells Fargo & Co. announced and priced a $2 billion offering of $1,000-par series U class A noncumulative preferreds.

A trader said the deal – coming via Wells Fargo Securities LLC – was being talked around 6.125%, though it was later launched at 5.875%.

“It’s putting a little pressure on the other preferreds,” a trader said.

© 2015 Prospect News.
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