Citigroup sells new $1,000-par preferreds; Goldman Sachs' recent deal declines in trading

By Stephanie N. Rotondo

Phoenix, Oct. 22 - Preferred stocks were strong as the week began Monday.

Citigroup Inc. announced a new preferred stock deal early in Monday's session.

A trader said there was no selling group for the $1,000-par securities, which will be unlisted.

Price talk was initially 6.375% to 6.5%, according to the trader. But pricing was later downwardly revised and the deal later came as a $1.5 billion issue at 5.95%.

Meanwhile, the Goldman Sachs Group Inc.'s recently priced 5.95% series I noncumulative perpetual preferreds continued to trade off Monday, continuing Friday's downhill slide. The issue was also among the day's most actively traded securities.

Fannie Mae and Freddie Mac preferreds were also trading busily following the publishing of an opinion piece in the Wall Street Journal. In the article, Jim Millstein, who oversaw the restructuring of American International Group Inc., gave his view on what has happened with the government-subsidized mortgage issuers and what should be done going forward.

A trader remarked that the preferreds "bounced up and then sold off" after the article was published.

The 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were trading at $1.53, up 13 cents, or 9.29%. Paper had been as high as $1.75 in early trading.

Citigroup prices preferreds

Citigroup priced a $1.5 billion issue of 5.95% series A fixed-to-floating rate noncumulative preferreds on Monday.

The deal was originally slated to come between 6.375% to 6.5% but was massively revised lower.

"It was kind of sloppy," a market source said of the original price talk. "Citi's got to be very happy with that."

At midday, a trader said he had not seen any markets in the $1,000-par preferreds. After pricing, a source pegged the issue at 101.25 bid, 101.5 offered. Even ahead of pricing, he said, the issue was trading in that context.

Citigroup Global Markets Inc. is the bookrunner and structuring coordinator. UBS Securities LLC is the lead manager.

Proceeds will be used for general corporate purposes.

Also, Citigroup's other preferred issues were trading actively, but mixed on the day.

The 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) rose 11 cents to $28.36, while the 6% capital securities (NYSE: CPQ) dipped 2 cents to $25.14.

A market source noted that the 6% securities are currently callable, but he doubted that the surge in action had anything to do with the new issue.

Citigroup is a New York-based bank.

Goldman losing ground

Goldman Sachs' own 5.95% issue - series I noncumulative perpetual preferreds - was again moving downward on Monday.

A trader pegged the issue at par at midday, down from just over par on Friday.

By the end of the day, the preferreds had put on a bit, ending at $25.03, a penny weaker on the day.

The issue was also topping the day's most active list with more than 3.1 million shares trading.

The deal priced on Wednesday.

Goldman is a New York-based investment bank.

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