Preferreds fail to recoup losses; Northern Trust’s new deal weak; Citigroup, Ally active

By Stephanie N. Rotondo

Phoenix, Aug. 1 – Preferred stocks remained in retreat on Friday though the market had initially been “flat to slightly up,” according to a trader.

The Wells Fargo Hybrid and Preferred Securities index finished the session down 30 basis points. At mid-morning, the index was up 5 bps but soon started to drift downward. The index then attempted a comeback at mid-afternoon but couldn’t really gain any traction.

A disappointing jobs number was at least partially to blame for the weakness. The Labor Department said Friday that 209,000 jobs were added in July, down from the 230,000 expected. However, the report was the sixth straight month that more than 200,000 jobs were added to the marketplace.

Unemployment increased to 6.2%, versus expectations it would hold steady at 6.1%.

As for the primary preferred market, Northern Trust Corp.’s new $400 million of 5.85% series C noncumulative perpetual preferreds were softer on the day, trading in a range of $24.11 to $24.65. Ultimately, the paper ended at $24.40, down 23 cents from Thursday’s close.

A trader saw the issue quoted wide at $24.40 bid, $24.74 offered

The deal priced on Tuesday.

Meanwhile, Starwood Waypoint Residential Trust registered $100 million of series A cumulative redeemable preferreds late Thursday.

But a trader said he had yet to see any details on the offering, adding that he did not expect it to officially launch until Monday.

Public Storage could also soon be adding to the pipeline, the trader speculated, as the company just put out “good earnings.”

“It wouldn’t surprise me,” he said. “They’re pretty consistent with bringing deals after earnings.”

In secondary dealings, liquidity was toward the light side, but there were a few issues that saw some serious trading.

Citigroup Inc.’s 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) traded down 8 cents at $27.01 with 4.19 million shares changing hands. Ally Financial Inc.’s 8.125% series 2 fixed-to-floating rate trust preferreds (NYSE: ALLYPA) meantime fell 7 cents to $27.11, with about 1.19 million shares trading.

Another 1.09 million of the Goldman Sachs Group Inc.’s 6.375% series K fixed-to-floating rate noncumulative perpetual preferreds (NYSE: GSPK) changed hands, declining 14 cents to $25.45.

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