CoreSite prices, trades at par; Seaspan expected to 'do fine'; Citigroup rises on job cuts

By Stephanie N. Rotondo

Phoenix, Dec. 5 - It was a "relatively flat" day for the preferred stock market, a market source reported Wednesday.

Preferreds began to fade in the late morning, he said, though overall, volume was "OK."

CoreSite Realty Corp.'s new $100 million of 7.25% series A cumulative redeemable perpetual preferred shares was getting a lot of play, a trader said Wednesday. The issue freed to trade after pricing early Wednesday.

However, the trader was "not seeing a lot of action" in Seaspan Corp.'s proposed new issuance of series D cumulative redeemable perpetual preferreds.

"I'd imagine it will do fine with the 8% coupon," he said, noting that there have not been many deals with such high dividends of late.

"I think it's gone pretty well," said another source.

In the secondary, Citigroup Inc.'s preferreds posted good-sized gains on news the company was planning hefty job cuts. The layoffs come as the bank looks for ways to reduce costs.

CoreSite prices, hits par

CoreSite Realty priced $100 million of 7.25% series A cumulative redeemable perpetual preferred shares on Wednesday.

"It's taking up most of the broker chatter," a trader said, seeing a par bid for paper.

The trader also noted that the issue had freed to trade shortly after pricing early Wednesday.

The Denver-based real estate investment trust originally announced the deal on Tuesday.

Kimco underwhelms

"Retail exhaustion" was possibly partly to blame for a lackluster performance in Kimco Realty Corp.'s $175 million issue of 5.625% class K cumulative redeemable perpetual preferreds, according to a trader.

The issue, which priced Nov. 28, was seen at $24.65 as of midafternoon.

The less-than-stellar performance was notable, given that Kimco's deals tend to do well. A 5.5% issue that came in July "traded fine," the trader said. "It was trading at or above par until the announcement of the new one."

But with the 5.5% preferred issue trading at a 5.6% yield, "why wouldn't you buy the new one?" the trader said.

Entergy to list

In new listings, Entergy New Orleans Inc.'s $25-par 5% first mortgage bonds due 2052 hit the New York Stock Exchange.

The ticker symbol is "ENJ." The $30 million issue came Nov. 26.

The notes were trading at par, versus opening level of $24.97.

Citi up on job cuts

Citigroup's 7.5% $100-par tangible dividend enhanced common stock (NYSE: CPH) jumped $4.48, or 4.49%, to $104.33 on news the bank intended to lay off 11,000 employees in an effort to cut costs.

The 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) were also up, gaining a penny to $27.96, albeit in minimal trading.

The cuts are not the first Citigroup has done in an effort to turn itself around. Since the beginning of the economic crash in 2007, the company has reduced its total workforce by 33%.

The new cuts will result in a pretax charge of about $1 billion in the fourth quarter and $100 million in related charges for the first quarter of 2013.

Also, 84 branches of the bank are expected to be shuttered due to the cuts.

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