Preferreds rise; Bank of America frees to trade; Citigroup up; oil-linked paper gains

By Stephanie N. Rotondo

Seattle, April 19 – The preferred stock market was inching upward in Tuesday trading.

The Wells Fargo Hybrid and Preferred Securities index closed up 25 basis points. The index was up 13 bps at mid-morning.

Despite the firm tone, a trader said morning activity was dragging.

“I’m hearing rumblings of a new deal but no name,” he added.

As for Monday’s new issues, Bank of America Corp.’s $900 million of 6% series EE noncumulative perpetual preferreds freed from the syndicate as of mid-morning, according to a trader.

He pegged the issue at $25.15 bid, $25.17 offered.

After the bell, another market source said the preferreds closed at $25.18 on about 7.5 million trades.

The deal came via BofA Merrill Lynch and was upsized from $250 million. Price talk was initially around 6.125% but was later tightened to 6%.

Meanwhile, Citigroup Inc.’s $1.5 billion of 6.25% $1,000-par fixed-to-floating rate noncumulative preferreds were seen at 102.25 bid in early trading. At the close, a source quoted the issue at 101.75 bid, 102 offered.

Price talk on that issue was initially around 6.5%.

Citigroup Global Markets Inc. ran the books.

Dividends will be fixed and payable semiannually through Aug. 15, 2026. At that point, the paper will begin to pay quarterly dividends at a rate equal to Libor plus a spread of 451.7 bps.

Meanwhile, oil and gas-linked preferreds were gaining momentum on Tuesday as domestic crude popped over 3% for the day.

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