Japan quake shakes up preferreds; Edison quivers post-tsunami warnings; Citi, Ally dominate

By Stephanie N. Rotondo

Portland, Ore., March 14 - The 8.9 earthquake that happened off the coast of Japan Friday resulted in a quiet trading day in the preferred market on Monday, according to a market source.

"Most people spent the day trying to figure out Japan and what that means for risk," he said.

As such, there was "more red than green again."

The effect of the earthquake pressured preferreds issued by utilities as well as insurers. Edison International was one of the more active power producers.

Away from earthquake-impacted names, bank issuers such as Citigroup Inc. and Ally Financial Inc. continued to dominate trading.

Edison shaken by quake

Edison International's 6.5% preferred stock dipped below par as investors wondered what Japan's earthquake meant for the Rosemead, Calif.-based power producer, a trader said.

The preferreds fell to 99.75.

After the earthquake occurred Friday, the company - which is situated along a fault line - issued a statement saying that its San Onofre nuclear power plant was operating safely amid tsunami warnings.

However, Japan has experienced several explosions at its nuclear facilities since the quake, and worries about meltdowns abound.

Some industry experts have placed insurance costs associated with the earthquake at around $60 billion. That has weighed down on insurance provider preferreds, such as American International Group Inc.'s 8.175% $1,000-par preferreds.

A trader said the preferreds were down half a point at 107.75 bid, 108 offered.

Citi, Ally top active list

Citigroup's series N and J preferreds were among the day's most actively traded securities, according to a trader.

The 7.875% series N preferreds fell 6 cents to $27.07, while the 8.5% series J trust preferreds were steady at $26.85.

The 8.175% hybrid trust preferreds issued by Ally's GMAC Capital Trust I meantime dropped 9 cents to $25.51.

Market awaits Fed decision

The Federal Reserve was expected to announce its decision on Monday in regards to its dividend policy.

The decision will determine whether or not U.S. banks can increase their common stock dividends and stock repurchase programs. If the Fed allows the increase, it would be considered a positive sign in terms of the strength of the banking system.

Banks that received TARP funds but have not paid them back are not expected to be allowed to increase or, in some cases, reinstitute dividends or stock buybacks.

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