Citigroup lifts preferred offering to $500 million, tightens yield; Prudential taps market

By Stephanie N. Rotondo

Phoenix, March 19 - The preferred stock market was "pretty much flat," a market source reported on Tuesday.

Liquidity was also on the moderate side, away from continued activity in Fannie Mae and Freddie Mac.

Two new issues came to market, one from Citigroup Inc. and one from Prudential Financial Inc.

Citigroup said it was selling at least $250 million of series C noncumulative perpetual preferreds, talked at 5.875% to 6%.

"I imagine they'll push it to the 5.875% level," a trader said.

Push it they did, bringing $500 million of the preferreds at par to yield 5.8%.

Prudential meantime said it was offering fixed-to-floating rate junior subordinated notes due 2044. The deal priced after the bell, with $500 million of the $1,000-par notes being sold at par, yielding 5.2%.

Citigroup taps market

Citigroup priced a $500 million issue of 5.8% series C noncumulative perpetual preferreds on Tuesday.

The deal was originally slated to be $250 million, with price talk between 5.875% and 6%.

A trader saw the issue trading at $24.85 bid, $24.90 offered in the midday gray market.

The offering comes just days after the New York-based financial institution announced a $3.3 billion redemption of trust preferreds.

Prudential sells $500 million

Also in the primary, Prudential Financial sold $500 million of 5.2% $1,000-par junior subordinated notes due 2044.

The sale was announced less than two weeks after the company priced a $650 million offering of 5.7% $25-par junior subordinated notes due 2053.

Proceeds of both offerings will be combined to redeem all $920 million of 9% junior subordinated notes due 2068.

A trader said he had not seen the new issue trading and another market source remarked that it was rare to see gray markets in $1,000-par issues.

The issue is not going to list on any exchange.

However, the 5.7% notes were seen at $24.85. The trader said the notes got a new trading symbol - "PRH" - and said he expected the securities to list on the New York Stock Exchange either Wednesday or Thursday.

As for the most recent deal, through March 15, 2024, interest will be payable on the 15th day of March and September at the fixed rate. Beginning on June 15, 2024, the interest rate will begin to float at three-month Libor plus 307 bps.

Once floating, the interest will be payable on the 15th day of March, June, September and December.

Prudential is a Newark, N.J.-based financial services and insurance provider.

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