Citi call chatter questioned, preferreds gain; RBS shares active, better; Ally regains ground

By Stephanie N. Rotondo

Portland, Ore., April 29 - Market sources were calling into question Friday rumors that Citigroup Inc. plans to call its trust preferreds in the near term.

The rumors began after the bank held a fixed-income investor call earlier in the week. Then chatter began, sending Citi's preferreds on a rollercoaster.

The preferreds closed higher on Friday.

Royal Bank of Scotland Group plc was also stronger in end-of-week trading, though on no news.

Citi moves back up

Citigroup's preferreds were trending higher as some in the marketplace speculated that the New York-based firm could start calling its trust preferreds as early as next week.

"A couple of people on the sellside said stuff that was not correct, but it created a market reaction," a market source said, adding that it was unlikely Citi planned to start redemptions so early ahead of Dodd-Frank and Basel III.

Still, he said the gains "make sense if you believe their whole story. If the preferreds are trading at a discount, you would expect the price to go up" in the event of a call at par. However, "if they are trading at a discount, they probably won't be called out."

"I think it was a case of somebody talking their position," he added.

He said the 8.5% series J preferreds were flat at $26.45 and the 6% series S preferreds moved up a nickel to $22.91.

At another shop, a trader saw the series S paper up 7 cents at $22.93 and the series Js down a nickel at $26.40.

RBS active, higher

Royal Bank of Scotland Group preferreds continued to be actively traded, according to a trader who called the shares up 10 cents to 15 cents on the day.

The RBS 6.08% series G preferreds gained 15 cents to close at $15.85, while the 6.25% series I preferreds improved 16 cents to $15.94.

The 7.65% series F preferreds were up the most, closing 38 cents higher at $24.39.

Ally regains ground

Ally Financial Inc.'s 8.5% series B preferreds were the day's most actively traded securities, a market source said, with some 738,000 shares changing hands.

He called the preferreds up 22 cents at $26.12.

The preferreds had fallen earlier in the week after the Detroit-based company paid a partial dividend on the preferred equity.

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