Preferreds rebound after Friday’s losses; Citigroup prices new $1,000-par noncumulatives

By Stephanie N. Rotondo

Phoenix, April 20 – After taking a serious hit in Friday trading, the preferred stock market was “roaring back,” a trader said Monday.

The Wells Fargo Hybrid and Preferred Securities index closed 14 basis points higher, though it was up 20 bps at mid-morning. The index closed down 43 bps on Friday.

With the renewed strength of the marketplace, Citigroup Inc. announced a benchmark offering of $1,000-par series P fixed-to-floating rate noncumulative preferreds.

The New York-based investment bank priced $2 billion of the preferreds at par to yield 5.95%.

Price talk was around 6.125%, according to a market source.

Post-pricing, a source saw the issue trading at 100.5.

Citigroup Global Markets Inc. ran the books.

The dividend will be fixed until May 15, 2025 and will be payable semiannually during that time. After that date, the issue will begin floating at Libor plus 390.5 bps and will be payable quarterly.

On the heels of the new deal, most of Citigroup $25-par preferreds were trending higher.

The 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPK) closed 2 cents better at $27.29, while the 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) improved a penny to $26.43.

On Thursday, the company reported a 21% surge in its quarterly profit.

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