Market hopes for direction from Fed; Citigroup comes in; Kayne Anderson lists; HSBC active

By Stephanie N. Rotondo

Phoenix, Sept. 17 - Preferred stock investors are waiting to see what comes out of a Federal Open Market Committee meeting happening Tuesday and Wednesday, a trader said.

As such, overall trading was thin aside from a handful of issues.

No new issues were launched, but the trader opined that if the market sees a "jump in price," the deals could start flowing more freely.

After the bell, a market source said the market opened just a touch, only to fade and then bounce around for the remainder of the day.

The Wells Fargo Hybrid and Preferred Securities index finished the session off 6 basis points, or just over a penny for $25-par shares.

In recent deals, Citigroup Inc.'s $900 million of 7.125% fixed-to-floating rate noncumulative perpetual preferreds continued to be active, though the issue came in a little during Tuesday's session.

A trader said the issue was offered at $24.98 early in the day but that it was at $24.92 bid, $25.03 offered as of midday. After the close, a source called the issue off 2 cents at par.

"It's still not bad considering some of the other stuff we've seen," he said.

And, Kayne Anderson MLP Investment Co.'s $50 million of 4.6% series G mandatory redeemable preferreds - a deal that came Sept. 9 - listed on the New York Stock Exchange under the ticker symbol "KYNPG."

The issue was trading up 6 cents at $24.36 at midday. The gains continued throughout the day, leading the preferreds to end up a dime at $24.40.

HSBC Holdings plc's floating-rate series G noncumulative preferreds (NYSE: HBAPG) were meantime seeing massive trading, with over 3.6 million shares changing hands as of midday. At that time, the preferreds were up a nickel at $19.60.

By day's end, over 3.7 million shares had traded, with the paper closing up 31 cents, or 1.59%, at $19.86.

A market source said there was "nothing new" out on the banking institution to cause the surge, but noted that "there is an investor out there unloading floating-rate assets." He opined that the activity could be a result of that.

Also active were Wells Fargo & Co.'s 5.85% fixed-to-floating rate series Q noncumulative preferreds (NYSE: WFCPQ). Over 1.7 million traded, with the preferreds dropping 7 cents to close at $23.38.

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