Midday Commentary: Entergy Arkansas frees to trade; Comcast, Prudential trade actively

By Andrea Heisinger

New York, Dec. 7 - The trend of a flat preferred stock market continued on Friday as sources said the situation was normal for the end of the week.

"Volume is a little lightish," one trader said.

Another commented that the "secondary is pretty flat" as of midday.

"I would say it's about 2 cents off [overall]."

The new $200 million of 4.9% $25-par mortgage bonds due 2052 from Entergy Arkansas Inc. were a hot commodity and had freed to trade at midmorning in the New York session, a trader said.

"It's hard to find right now," he added. "It's bid up. We've seen it at $25.08, a lot of par trades, and I would say the average is $25.05."

The $750 million of Citigroup Inc. 5.9% perpetual fixed-to-floating rate notes priced late Thursday were quoted at "par and an eighth" by one trader.

The preferreds carry a fixed rate until February of 2023 and a floating rate of Libor plus 423 basis points afterward.

Citigroup Global Markets Inc. was the bookrunner for the sale.

There was market chatter of Bank of America Corp. perhaps following Citigroup's lead in pricing preferreds soon.

"With Citi bringing their perpetual, I would guess that BofA's not far behind," a trader said. "They have a lot of TRUPs and other stuff they could clean up. If they could bring something with a sub-6 [percent coupon] now, it would make sense."

The trader added that the bank and other issuers "don't want to see what happens" with fiscal cliff talks in Congress, or the possibility of a credit rating downgrade for the United States.

"It's just conjecture at this point," he said of the possibility of a Bank of America preferred issue.

Recent sales from Comcast Corp. and Prudential Financial Inc. that have been active throughout the week remained that way on Friday.

The Comcast 5% $25-pars due Dec. 15, 2061 were quoted at $25.35 in midday trading Friday, a source said. They were at $25.20 at Thursday's close.

Prudential's 5.75% $25-par junior subordinated notes due Dec. 15, 2052 were seen at $25.40 in midday trading. The shares were quoted at $25.20 at the market close Thursday.

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