Preferreds soften; Wells Fargo below par; Synovus running up; International Ship on tap

By Stephanie N. Rotondo

Phoenix, July 24 - Preferred stocks were giving back some recent gains on Wednesday as the long Treasury bonds declined.

"Housing numbers were better, the economy is getting stronger," a trader said. Recent economic data seemed to suggest that the Federal Reserve would "tighten interest rates sooner than later" and could even begin tapering its bond repurchase program as soon as September.

If that's the case, the trader said, the preferred market could see a sell-off.

As for Wednesday's performance, a market source said the market was off by "not quite 10 cents" on average for $25-par securities.

Volume was "mostly light," aside from a handful of issues.

Signs of the potential sell-off were being seen in Wells Fargo & Co.'s $1.5 billion issue of 5.85% series Q class A fixed-to-floating rate noncumulative preferreds (NYSE: WFCPQ). The paper traded below par by midday, with a trader quoting the issue at $24.93 bid, $24.94 offered.

The preferreds finished the day down 29 cents to $24.84. A market source said the issue was the day's most actively traded with over 2 million shares changing hands.

The issue priced July 15 and listed on the New York Stock Exchange on Tuesday.

However, Synovus Financial Corp.'s $130 million of 7.875% series C fixed-to-floating rate noncumulative preferreds - a deal that priced Monday - continued to run up. A trader said there was an early trade at $25.75, with shares being offered at $25.85 at midday.

After the close, a source said the issued ended flat at $25.75, though he added that it was among the most actively traded preferred securities.

The source saw more than 1 million shares change hands during the session.

As for upcoming deals, International Shipholding Corp.'s planned sale of $100-par series B cumulative redeemable perpetual preferreds could price on Friday, according to one market source.

Price talk on the deal is around 9%. It will not be rated, but the company has applied to list the preferreds on the New York Stock Exchange.

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