Preferreds gyrate ahead of FOMC news; Full Circle slated for Wednesday; Countrywide dips

By Stephanie N. Rotondo

Phoenix, June 18 - The preferred stock market was drifting in a bit on Tuesday, which a trader said could be attributed to profit-taking.

He also noted the housing numbers "were good," as new home construction starts rose 6.8% in May, though new construction permits dipped 3.1%.

He also remarked that the consumer price index was "off a little bit."

The data could suggest that the "economy might not be as strong" as some think, he said. As such, many investors were waiting to see what the Federal Reserve's FOMC would say on Wednesday.

After the bell, a market source said that the market initially opened down, but then "bounced around."

"It was a general upward trend the rest of the day," he noted.

Because of the broad market volatility seen in the last few weeks, the primary preferred market has been slow.

"A lot of stuff was shelved," a trader said. For instance, he said there was a large bank deal that was originally planned for the beginning of last week, but it never came.

"I think everyone is waiting for the volatility to calm down," he said.

"I don't know when we'll see another new issue," another source commented.

Full Circle Capital Corp.'s expected $25 million offering of $25-par senior notes is expected to launch on Wednesday, according to a trader with knowledge of the deal. He said the issue would have a seven-year term and be non-callable for three years.

"We're still waiting on price talk," he added.

Financials taking flak

Though the market ended with a firmer tone, most of the day's most liquid issues - most of which were financials - were on the softer side.

Countrywide Financial Corp.'s 7% capital securities (NYSE: CFCPB) dropped 6 cents to $25.18 as speculation that parent company Bank of America Corp. might put the mortgage unit into bankruptcy resurfaced, according to a source.

Meanwhile, Citigroup Inc.'s 6.45% enhanced trust preferred securities (NYSE: CPW) were off just over a penny, closing at $25.44.

That issue has been called for July 15.

HSBC Holdings plc's 8% exchangeable perpetual subordinated capital securities (NYSE: HCSPB), however, closed up 16 cents at $25.57. JPMorgan Chase & Co.'s 5.5% series O noncumulative preferreds (NYSE: JPMPD) were also on the rise, gaining 21 cents to end at $24.20.

Away from financials, Qwest Corp.'s 6.125% $25-par notes due 2053 (NYSE: CTY) finished the day down a dime at par even.

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