Recent preferred stock deals hanging in; secondary market starts soft, finishes week strong

By Stephanie N. Rotondo

Phoenix, April 25 - New preferred stock issues were "just sitting there" in Friday trading, according to a trader.

"Nothing is moving," he said.

Regions Financial Corp.'s $500 million of 6.375% series B fixed-to-floating-rate noncumulative preferreds, a deal that came Thursday, were trading off a bit, the trader said, seeing a $24.70 bid getting hit.

"That's probably the managers," he said.

The trader also remarked that he thinks the deal was "priced a little aggressively compared to what else is out there."

Another trader said the deal freed during the day's session, quoting the issue at $24.63 bid, $24.72 offered.

Goldman Sachs steady

From Wednesday's business, Citigroup Inc.'s $1.75 billion of 6.3% $1,000-par series M fixed-to-floating-rate noncumulative preferreds were pegged at 99.75 bid, 99.875 offered early in the day. Toward the close, the preferreds were seen at 99.5 bid, par offered.

Morgan Stanley's $500 million of 6.625% $25-par series G noncumulative perpetual preferreds were "hanging just below par," the trader said, trading around $24.95.

Another trader saw the shares at $24.90 bid, $24.98 offered.

As for the bank's $1.3 billion of 5.45% $1,000-par series H fixed-to-floating-rate noncumulative perpetual preferreds, there hasn't been much trading in that issue, a trader reported. He said that the last market he saw for the shares was "locked" at 100.75. He speculated that the paper was holding in a 100.25 to 100.75 range on Friday.

Both deals came Tuesday.

And rounding out the week's deals, Goldman Sachs Group Inc.'s $700 million of 6.375% $25-par series K fixed-to-floating-rate noncumulative perpetual preferreds were steady around $25.10, according to one trader.

At the close, another trader placed the paper at $25.10 bid, $25.18 offered.

The company's $1.3 billion of 5.7% $1,000-par series L fixed-to-floating-rate noncumulative perpetual preferreds were around 102.

The Goldman deals priced Monday.

Index finishes up

The trader said that, looking forward, he expects demand to stay high and the pipeline to be pretty heavy.

"This stuff was soaked up so fast," he said. "Nobody was getting shares aside from the leads."

The preferred stock market in general was a little weaker as of mid-morning after trading modestly higher all week.

The Wells Fargo Hybrid and Preferred Securities index was down 2 basis points early on. However, the market - and subsequently the index - started to turn higher just before lunch time.

The index finished the session up 36 bps.

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