Market quiet on government shutdown concerns; Citigroup lists; Morgan Stanley dominates

By Stephanie N. Rotondo

Phoenix, Sept. 30 - Preferred securities were flat at midday on Monday, which was also month- and quarter-end.

"Everybody is waiting to see what happens with the government," a trader said, referring to whether or not a partial shutdown would occur as of midnight. As such, he also commented that he had not heard of any new deals planned for the week.

"It's quiet," he said.

Another market source characterized the day as "bizarre."

"The market opened way down," the source said. Close to midday, things started to pick up a bit as the market traded flat to "slightly up," he said. But as the afternoon dawned, preferreds were fading again until the final 15 or 20 minutes of trading, the source noted. By the close, the preferred space was "close to flat," he said.

The Wells Fargo Hybrid and Securities index ended the day off 5 basis points, or 1.25 cents on average for $25-par paper.

As for volume, the source said that it was "for a Monday, OK. It wasn't great, but it was OK."

As was expected, Citigroup Inc.'s $900 million of 7.125% series J fixed-to-floating rate noncumulative preferreds were admitted to the New York Stock Exchange under the ticker symbol "CPJ."

The issue, which priced Sept. 12, was trading off 8 cents as of midday at $25.22. At the bell, the issue was down a nickel at $25.25.

Other recent deals from Morgan Stanley Co. Inc. and the Allstate Corp. continued to be busy as well. Morgan Stanley's $750 million of 7.125% series E fixed-to-floating rate noncumulative preferreds saw trading of about 1.2 million shares. The preferreds closed the day up a nickel at $25.20.

Earlier in the session, a trader said the paper was "hanging in" in a $25.15 to $25.20 context.

The deal came on Tuesday.

Meanwhile, Allstate's $350 million of 6.75% series C fixed-rate noncumulative perpetual preferreds - which came Sept. 23 - were also faring better, rising a nickel to $25.05.

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