Preferreds end week flat; Citigroup's new issue frees to trade; State Street paper weakens

By Stephanie N. Rotondo

Phoenix, Oct. 25 - The preferred stock market held in 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. However, the index managed to erase those losses, ending the day flat.

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.

State Street slips

State Street Corp.'s 5.25% series C noncumulative perpetual preferreds (NYSE: STTPC) fell a penny in modest trading on Friday, closing at $21.12.

On Tuesday, the Boston-based custody bank reported earnings, which showed a 3.4% rise in operating revenue amid a continuing phase of low interest rates.

Operating revenue was $2.47 billion. Though up from the year before, analysts polled by Bloomberg had expected revenues of $2.54 billion.

Net income meantime declined by 19% to $531 million, or $1.17 per share.

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