Midday Commentary: Costamare launches first preferred of 2014; Citigroup issue seen as attractive

By Stephanie N. Rotondo

Phoenix, Jan. 13 - The new preferred issue pipeline began to open on Monday as Costamare Inc. announced plans for at least $50 million of series C cumulative redeemable perpetual preferreds.

Price talk is around 8.5%, a trader said.

Though the trader said he had thought a bank would be the first new deal of the year, he opined that the Costamare issue "will do well."

At mid-morning, he had seen a $24.92 offer for paper in the gray market.

Pricing is expected on Tuesday.

Morgan Stanley & Co. LLC, UBS Securities LLC and Credit Suisse Securities (USA) LLC are running the books for the non-rated deal. Barclays, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are the co-managers.

The trader also noted that over the weekend, Barron's published an article about "where to find great yields." In a section regarding preferred securities, Citigroup Inc.'s 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPK) were mentioned as one such deal.

The issue was active in early secondary trading, moving up a nickel to $25.78.

Overall, the preferred space continued to be strong.

The Wells Fargo Hybrid and Preferred Securities index was up 32 basis points at mid-morning.

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