Citi’s new $1,000-pars trade around par; Global Indemnity frees; Qwest notes weaken

By Stephanie N. Rotondo

Phoenix, Aug. 6 – Preferred stocks were modestly higher in Thursday trading, even as the straight equity market declined.

The stock market’s decline was attributed to weakness in media stocks, as investors worried about consumers moving away from cable TV.

The Wells Fargo Hybrid and Preferred Securities index ended up 4 basis points. One market source noted that the index was up 2 bps to 8 bps all day.

In recent deals, Citigroup Inc.’s $1.25 billion of 5.95% $1,000-par series Q fixed-to-floating rate noncumulative preferreds – a deal that priced Wednesday – was seen holding “right around par,” a trader said.

He quoted the issue at 99.75 bid, par offered.

The trader noted that the new issue “freed almost immediately” after pricing.

After the bell, a market source said the issue closed at par, though he said the volume weighted average price was 100.0275.

Among new $25-par issues, Global Indemnity plc’s $100 million of 7.75% subordinated notes due 2045 – another deal from Wednesday – freed to trade early in the afternoon.

The notes were pegged at $24.57 bid, $24.60 offered early in the session but moved up to $24.70 bid, $24.75 offered by the bell, according to a source.

Qwest dips post-numbers

Qwest Corp.’s 7% $25-par notes due 2052 (NYSE: CTU) were weakening in early trades, as the market reacted to parent company CenturyLink Inc.’s earnings announcement.

The notes closed down 3 cents at $26.28.

The earnings came in below Wall Street expectations, and the company also lowered its outlook.

For the second quarter, net profit was $143 million, or 26 cents per share. On an adjusted basis, earnings per share was 55 cents.

Revenue was $4.42 billion.

Analysts polled by Zacks Investment Research had forecast adjusted earnings per share of 61 cents on revenue of $4.43 billion.

CenturyLink also said that it expected earnings per share for the current quarter to be between 53 cents and 58 cents on revenues between $4.42 billion to $4.47 billion.

For the year, earnings were guided at $2.35 to $2.55 per share on revenues of $17.7 billion to $17.9 billion.

CenturyLink, formerly known as Qwest, is a Monroe, La.-based telecommunications company.

Fannie, Freddie rebound

In other earnings news, Fannie Mae and Freddie Mac paper recovered from its earlier weakness after Fannie came out with its quarterly results.

“Fannie and Freddie are slightly weaker from when they ran up the other day,” a trader said at mid-morning, referring to gains posted after Freddie released its earnings.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) rose 20 cents, or 4.17%, to $5.00, while Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) improved by 30 cents, or 6.25%, to $5.10.

In the second quarter, Fannie saw net income of $4.6 billion, up from $3.7 billion the year before.

The earnings marked the 14th consecutive profitable quarter for the mortgage giant.

Due to the government’s conscription of most of the GSE’s profits, Fannie will make a $4.4 billion payment to the U.S. Treasury next month. All told, Fannie will have paid dividends of $142.5 billion.

The firm received $116 billion in bailout funds in September 2008.

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