Citi heralds solicitation results, preferreds trade mostly up; Public Storage to issue

By Stephanie N. Rotondo

Portland, Ore., April 4 - The big news in the preferred stock market on Monday was Citigroup Inc.'s announcement that it received approval to terminate certain capital replacement covenants for its securities.

The company has been attempting to do so for some time but initially was unable to get the needed consents to do away with the covenants. Once the market learned that approval had been secured, Citi's preferreds were mostly firmer on the day.

A trader saw the 7.25% series F preferreds closing a penny higher at $25.16, while the 7.875% series G preferreds gained a nickel to close at $25.72.

The 6.35% series E preferreds, however, were "a curious one," as the paper lost 13 cents to close at $23.44.

"It should have pushed the price up," the trader said, as the consent solicitation results increase the likelihood that the preferreds will get called.

As banks and other financial institutions prepare for the implementation of the Frank-Dodd bill, many have done similar consent solicitations to prepare themselves for when trust preferreds are no longer deemed tier 1 capital. Citigroup's solicitation, however, was "interesting" because unlike other banks, stakeholders were not so quick to jump on board.

"It was a very slow process this time around," the trader said.

In the new issue market, Public Storage was heard to be bringing a deal, the proceeds of which would go toward funding the redemption of the company's 7.25% series I preferred shares.

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