Preferred stocks end weaker again; U.S. Cellular notes free to trade; Public Storage gains

By Stephanie N. Rotondo

Phoenix, Dec. 2 – After getting hammered in the previous session, preferred stocks were staging a modest comeback in early Tuesday trading.

However, those early gains disappeared shortly after midday.

The Wells Fargo Hybrid and Preferred Securities index closed off 4 basis points. At mid-morning, the index was up 2 bps.

On Monday, the index closed down 28 bps, or about 7 cents on average for $25-par issues.

United States Cellular Corp.’s $275 million of 7.25% senior unsecured notes due 2063 freed from the syndicate around midday, according to a trader.

The deal came Monday, upsized from $200 million and at the tight end of talk.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, RBC Capital Markets, UBS Securities LLC and Wells Fargo Securities LLC ran the books.

The trader saw the issue trading in a $24.58 to $24.60 context early in the day. After freeing up, the paper was quoted at $24.57 bid, $24.62 offered.

Meanwhile, Public Storage’s $175 million of 5.875% series A cumulative perpetual preferreds were holding on to the previous day’s gains – and even managed to gain a little bit more.

The preferreds finished the day up a nickel at $24.95.

The deal priced Nov. 20.

Redemptions in vogue

Several redemptions were announced on Tuesday, including one from DRA CRT Acquisition Corp.

The New York-based company plans to redeem its 8.5% series A cumulative redeemable preferreds (OTCBB: DCAQP) on Jan. 2.

The redemption price is par plus accrued dividends of 10.625 cents per share.

On the news, the issue traded up 67 cents, or 2.76%, to $24.92.

Goleta, Calif.-based Community West Bancshares also said it was redeeming some of its 9% series A cumulative perpetual preferreds. The bank implemented a preferred stock repayment strategy in July. At that time, it redeemed $7.8 million of the shares, leaving about $7.8 million outstanding.

The company redeemed more shares in October and plans to redeem another $702,000 on Jan. 2.

Meanwhile, Raleigh, N.C.-based First Citizens Bancshares Inc. intends to call all $51.55 million of its 8.25% junior subordinated deferrable interest debentures due March 15, 2028 and all $50 million of its 8.25% trust preferred securities.

The redemption price for the debentures will be 101.65 plus accrued interest to the Dec. 31 redemption date.

The trust preferreds will be redeemed at 101.65% of their liquidation amount plus accrued distributions to the redemption date, also on Dec. 31.

Banks get busy

Investors were jockeying around in big bank preferreds on Tuesday.

Bank of America Corp.’s preferred stocks were mostly higher on the day, but the most active issue – the 6.625% series W noncumulative preferreds (NYSE: BACPW) – fell a penny to $25.34.

Citigroup Inc. was meantime softer. The 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPK) declined 12 cents to $26.28, while the 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) dipped 2 cents to $26.58.

All of Goldman Sachs & Co.’s preferred shares were on the downside as well. The 5.5% series J fixed-to-floating rate noncumulative perpetual preferreds (NYSE: GSPJ) lost 18 cents, closing at $23.91 and the 6.375% series K fixed-to-floating rate noncumulative perpetual preferreds (NYSE: GSPK) finished off 23 cents at $25.44.

In JPMorgan Chase & Co. paper, the issues were mixed on the day. The 6.7% series T noncumulative preferreds (NYSE: JPMPB) dropped 21 cents to $25.94, and the 6.3% series W noncumulative preferreds (NYSE: JPMPE) slipped 2 cents to $25.43.

However, the 5.5% series O noncumulative preferreds (NYSE: JPMPD) ended a penny higher at $23.76.

Separately, Wells Fargo & Co.’s preferreds were mostly down on the day.

The 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) ended 22 cents weaker at $25.42, but the 6% series T class A noncumulative preferreds (NYSE: WFCPT) put on a dime, closing at $25.26.

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