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Morning Commentary: Citigroup to price new $1,000-par preferreds; Fannie, Freddie moving upward
By Stephanie N. Rotondo
Seattle, Nov. 5 – The preferred stock market’s primary space had a new deal added to the calendar Thursday from Citigroup Inc.
Citi is offering $1,000-par series R fixed-to-floating rate noncumulative perpetual preferreds, according to a regulatory filing. Price talk is around 6.25%.
A trader said he had not seen any gray market quotes for the paper but did note that “at that price, they will put that away quickly.”
There has been chatter for the past couple of weeks that the New York-based bank was planning a deal. Earlier in the week, one market source told Prospect News that the buzz was ramping up.
Citigroup Global Markets Inc. is the bookrunner.
As for Citi’s existing issues, they were trading down early in the session.
The 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPK) fell 17 cents to $27.16, as the 5.8% series C noncumulative preferreds (NYSE: CPC) dropped 11 cents to $25.24.
Meanwhile, Fannie Mae and Freddie Mac preferreds were heading higher. A trader said the gains were due in part to Fannie’s “strong earnings,” which came out Thursday.
The GSE reported a $1.96 billion profit for the third quarter, down from $3.91 billion the year before. Fannie intends to send a $2.2 billion dividend payment to the Treasury in December.
The trader also noted news that indicated a pending lawsuit regarding the government’s conscription of a majority of the agencies’ profits would be allowed to move forward – a “positive for shareholders,” the trader said.
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