Trading flat as investors eye Syria, rising interest rates; Citigroup deal frees to trade

By Stephanie N. Rotondo

Phoenix, Sept. 13 - Preferred stocks were mostly flat on Friday and one trader noted that a lot of people were away from their desks.

"I don't know if it's the last hurrah of the summer or what," he said.

Investors, he said, were still waiting to see what goes down in Syria and when the Federal Reserve would begin its tapering of its stimulus program. Still, he said concerns about those events were diminishing.

"Things that everybody are worried about have already been priced in and it's all falling by the wayside," he said.

He noted that investors were even being a little cautious with Citigroup Inc.'s newly priced $900 million issue of 7.125% fixed-to-floating rate series J noncumulative perpetual preferreds, a deal that priced Thursday.

"People are still looking at how they are going to play these higher rates," he said, adding that the deal overall "looked really cheap."

The new issue freed up in early trading and was pegged at $24.85 as of midday.

Another market source said the new issue was not all that active given that it was Friday. Around noon, there was a $24.78 bid for paper, he said.

As for Zion Bancorporation's new $75 million of 6.95% fixed-to-floating rate subordinated notes due 2028, the source said there wasn't much activity in the issue, "which is pretty common after an auction."

Overall, preferred securities traded "in a narrow range" for most of the day, according to one source. He said that while certain preferred stock indexes appeared to be higher, "the reality is that the market is probably flat."

Forest City rises

Forest City Enterprises Inc., a Cleveland-based real estate company, saw its 7.375% senior notes due 2034 hitting the day's most active list, just days after the company announced a redemption of the securities.

The $25-par notes (NYSE: FCY) rose 66 cents, or 2.67%, to $25.34.

On Wednesday, Forest City said it would call the notes on Oct. 14. There is currently $225 million of the baby bonds outstanding.

HSBC active, mixed

A market source said HSBC Holdings plc's preferreds were trading busily in an otherwise quiet day, though he said there was no news to cause the activity.

The floating-rate series G noncumulative 8% exchangeable perpetual subordinated capital securities (NYSE: HBAPG) dropped 13 cents to $19.44. However, the series B paper (NYSE: HCSPB) gained a nickel, closing at $27.13.

The source speculated that liquidity in the name could be due to portfolio jockeying.

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