Midday Commentary: Market drifts lower despite 'strong' economic data; Fifth Third plans new deal

By Stephanie N. Rotondo

Phoenix, Dec. 4 - Despite fresh "strong" economic data, preferred stocks were selling off in early Wednesday trading.

Still, it wasn't as bad as it could have been.

"I thought we'd see a decent sell-off," a trader said, noting that long Treasuries "sold off quite a bit." Instead, he said, "it's been very subtle."

The Wells Fargo Hybrid and Preferred Securities index was down 14 basis points as of mid-morning.

Rumors of a new issue proved to be true, however, as Fifth Third Bancorp launched an offering of $450 million series I fixed-to-floating rate noncumulative perpetual preferreds.

Price talk is around 6.75%, but one trader said he was expecting that to be revised.

"It's mainly institutional," he said. The issue saw a par trade in the early gray market, with the shares being bid at $24.92.

The Cincinnati-based bank will use the proceeds from the sale for general corporate purposes, which may include common stock repurchases.

BofA Merrill Lynch, Goldman Sachs & Co., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are leading the offering.

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