Citigroup call chatter questioned, preferreds gain; RBS shares active; Ally regains ground

By Stephanie N. Rotondo

Portland, Ore., April 29 - Market sources were calling into question Friday rumors that Citigroup Inc. plans to call its trust preferreds in the near term.

The rumors began after the bank held a fixed-income investor call earlier in the week. Then chatter began, sending Citi's preferreds on a rollercoaster.

"A couple of people on the sellside said stuff that was not correct, but it created a market reaction," a market source said, adding that it was unlikely Citi planned to start redemptions so early ahead of Dodd-Frank and Basel III.

Still, he said the gains "make sense if you believe their whole story. If the preferreds are trading at a discount, you would expect the price to go up" in the event of a call at par. However, "if they are trading at a discount, they probably won't be called out."

"I think it was a case of somebody talking their position," he added.

He said the 8.5% series J preferreds were flat at $26.45 and the 6% series S preferreds moved up a nickel to $22.91.

At another shop, a trader saw the series S paper up 7 cents at $22.93 and the series Js down a nickel at $26.40.

Elsewhere, Royal Bank of Scotland Group plc was stronger in trading, though on no news.

Ally Financial Inc.'s 8.5% series B preferreds were the day's most actively traded securities, a market source said. Some 738,000 shares changed hands.

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