Citigroup prices benchmark $1,000-par preferreds; CYS sells new cumulative preferred stock

By Stephanie N. Rotondo

Phoenix, April 23 - The primary preferred stock market was kicking out deals on Tuesday, and buzz was that there were more to come.

"The word is that there's going to be more deals coming this week," a trader said.

Citigroup Inc. announced plans for an offering of $1,000-par series D fixed-to-floating rate noncumulative perpetual preferred stock. The deal priced at the close, with $1.25 billion of the preferreds being sold.

The issue was trading around par by the end of business.

Meanwhile, CYS Investments Inc. said it would price an offering of series B cumulative redeemable preferreds. That deal came shortly before the close, with $200 million of the preferreds pricing at par to yield 7.5%, in line with price talk.

And, shortly before midday, Teekay Offshore Partners LP priced $150 million of 7.25% series A cumulative redeemable preferreds.

The deal was originally announced on Monday.

In the secondary, Zions Bancorporation's 9.5% series C noncumulative perpetual preferreds were on the active side leading up to Monday's auction of a new series of noncumulative preferreds. A market source said it is believed that the Cs will be called after the new issue, though the securities do not become callable until Sept. 15.

Citi's $1,000-pars

Citigroup announced and then priced a $1.25 billion offering of 5.35% $1,000-par series D fixed-to-floating rate noncumulative perpetual preferreds on Tuesday.

"I believe that's all institutional," a trader said ahead of pricing, noting that he wasn't seeing any "real markets" for paper, aside from a 99.75 bid.

"It doesn't seem like it's trading around in the gray market much," he said at midday.

After pricing, a market source said the issue had gotten as good as "above 101" before coming back to end at par bid, par ¼ offered.

While the dividend is fixed, dividends will be payable semiannually on the 15th day of May and November. Beginning Aug. 15, 2023, the preferreds will float at a rate of three-month Libor plus 346.6 basis points and the payments will be made quarterly.

The New York-based financial institution intends to use the proceeds for general corporate purposes.

CYS brings new cumulatives

Early Tuesday, CYS Investments said it was planning a sale of series B cumulative redeemable preferreds.

At midday, a trader said the deal had already launched and closed and that pricing was expected sometime Tuesday.

Price talk was around 7.5%, according to the trader. He quoted the issue at $24.80 bid, $24.82 offered in the gray market.

The deal did in fact price Tuesday, coming shortly before the bell. The Waltham, Mass.-based real estate investment trust sold $200 million of the preferreds at par to yield 7.5%.

Proceeds are for investments in agency residential mortgage-backed securities and for general corporate purposes.

Teekay prices new deal

After announcing the deal on Monday, Teekay Offshore partners priced a $150 million issue of 7.25% series A cumulative redeemable preferreds early Tuesday.

Post-pricing, a trader saw the preferreds at $24.92 bid. The issue freed to trade shortly after pricing.

Proceeds will be used for general partnership purposes, including the funding of newbuilding installments, capital conversion projects and the acquisitions of vessels that Teekay Corp. has or might offer. Pending approval for such uses, the company may use the funds to pay down a portion of its revolving credit facilities.

The Hamilton, Bermuda-based company provides marine transportation, oil production and storage services to the offshore oil industry, focusing on the fast-growing, deep water offshore oil regions of the North Sea and Brazil.

Zions active pre-auction

A market source saw Zions Bank's 9.5% series C noncumulative preferreds trading actively and better as the market awaits a pending auction of a new series of preferreds next week.

The 9.5% preferreds (NYSE: ZBPC) closed up a penny at $25.85.

On Monday, the Salt Lake City-based bank will commence an auction of series H noncumulative preferred stock. The market source said there was a belief that the Cs could get called, though that issue doesn't become redeemable until Sept. 15.

However, the source also noted that the Cs might not get called in their entirety "if they can't get a big enough deal done.

"They can't sell more than they have orders for," he said.

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