Midday Commentary: Preferred stocks soft as week winds down; Citigroup's new issue frees to trade

By Stephanie N. Rotondo

Phoenix, Oct. 25 - The preferred stock market continued to give up recent gains on Friday, and a trader said liquidity was on the light side.

As of midday, the Wells Fargo Hybrid and Preferred Securities index was off by 7 basis points.

Among recent deals, a trader said Citigroup Inc.'s new $1.3 billion issue of 6.875% series K fixed-to-floating rate noncumulative preferreds had freed from the syndicate early in the day.

He pegged the paper at $24.88 bid, $24.90 offered.

The deal came on Thursday.

Meanwhile, First Republic Bank's $200 million of 7% series E noncumulative preferreds - a deal that priced Monday and freed up on Tuesday - were seen at $24.93 bid, $25.02 offered.

"There is a rumor of a big deal coming Monday, another bank," a trader said. He speculated that it could be either Bank of America Corp. or JPMorgan Chase & Co., as he said the banks could be looking to raise funds to pay for settlements recently inked with the Justice Department over mortgage-related issues.

"We could see a bunch of new deals coming quickly," he further opined.

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