Investors await word from Fed on bond buying; HSBC, NuStar active; Zions auction ongoing

By Christine Van Dusen

Atlanta, Sept. 11 - The preferred stock market ended Wednesday's session mostly flat as investors showed uncertainty about what the Federal Reserve is likely to do at its policy-setting meeting next week.

Some analysts expect the Fed to reduce its bond-buying program by as much as $15 billion, an amount that wouldn't come as a surprise.

In response, 10-year Treasuries were relatively stable at a yield of between 2.92% and 2.95% on Wednesday.

No new issues priced on Wednesday, a trader said.

"It's just the whole Fed picture, and everyone trying to figure out where things are going," he said.

In trading on Wednesday, HSBC USA Inc.'s floating-rate non-cumulative preferred stock, series G (NYSE: HBA-PG), was among the most active.

The notes traded at $19.58, down 71 cents on volume of 631,504 in the afternoon. At the close, the volume totaled 655,000 and the preferreds closed at $19.718.

HSBC's floating-rate non-cumulative preferred stock, series F (NYSE: HBA-PF), was also fairly busy on Wednesday. The stock traded in the afternoon at $18.27, down 25 cents on volume totaling 289,184.

At the close the preferreds were seen at $18.30, off 44 cents on volume totaling 365,000.

Deutsche Bank Contingent Capital Trust V's 8.05% trust preferred securities saw some action on Wednesday, trading at $27.50, up 23 cents. Volume totaled 180,090.

"Volumes are pretty much on the light side," the trader said.

Wells Fargo, NuStar stand out

Wells Fargo & Co.'s noncumulative perpetual preferred securities, series Q, saw 518,000 shares trade on Wednesday and finished the day off 7 cents at $23.83.

NuStar Logistics LP (NYSE: NSS) was also on radar screens on Wednesday, trading flat on the day at $25.62 with volume totaling 336,000.

"Everything traded down, pretty much until lunchtime, then traded up and then eased back, ending where it did yesterday," the trader said.

Zions auction in focus

One trader was keeping his eye on Zions Bancorporation and its online modified Dutch auction of up to $250 million fixed-to-floating rate $25-par subordinated notes due 2028.

The auction began on Wednesday and is expected to conclude on Thursday, though the auction could end earlier if bids for the maximum auction amount are received at the minimum interest rate, according to an announcement from Zions.

This "has occurred in other auctions conducted by Zions," the company said.

The proceeds from the sale will be used for general corporate purposes, which include a possible redemption of outstanding securities.

Last month, the Salt Lake City-based bank called all $799.5 million of its 9.5% series C noncumulative perpetual preferreds for Sept. 15. The call price is par plus approximately 61 cents.

The issue (NYSE: ZBPC) closed Wednesday unchanged, at about $25.00.

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