Fed announcement eyed; Northern Trust’s new 5.85% noncumulative preferreds free to trade

By Stephanie N. Rotondo

Phoenix, July 30 – The preferred stock market was muted and weaker Wednesday as investors waited to see what the Federal Reserve had to say after its two-day meeting concluded.

It was expected that the central bank would further reduce its bond repurchases, and the market was also looking for clues as to when short-term interest rates might rise.

The Fed did, in fact, reduce its monthly bond buyback program to $25 billion from $35 billion. However, no clue was given as to when rates might start to rise again.

And even on the heels of decent economic data, the preferred market was trending softer.

The Wells Fargo Hybrid and Preferred Securities index closed the day down 9 basis points.

According to a new report, gross domestic product increased 4% in the second quarter, beating estimates of 3% growth. However, a July survey by ADP showed that the private sector added 218,000 jobs during the month, missing expectations of 230,000 new jobs.

“A lot of things went ex-dividend yesterday, but there wasn’t a lot of movement,” a trader noted.

Northern Trust Corp.’s new $400 million of 5.85% series C noncumulative perpetual preferreds were seen hanging around $24.90 in early trading.

Later in the day, the issue was pegged at $24.88 bid, $24.95 offered, up slightly from $24.86 bid, $24.92 offered previously.

The issue freed to trade during the session.

The deal came Tuesday, upsized from $150 million. Price talk was 6%.

Morgan Stanley & Co. LLC, BofA Merrill Lynch and Wells Fargo Securities LLC led the books.

Proceeds will be used for general corporate purposes.

Northern Trust is a Chicago-based financial holding company.

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