Preferreds gain, but volume subdued; Wells Fargo calls 7% preferreds, shares trade down

By Stephanie N. Rotondo

Portland, Ore., March 28 - The preferred stock market was "up slightly but mostly flat," a market source said Monday.

"There was definitely more green than red," the source said. "That's always a positive."

The "big news" of the day was Well Fargo & Co.'s announcement that it will redeem its 7% capital IV preferred shares, according to the source.

The preferreds will be redeemed par of $25.00 on April 25. All told, the bank will redeem about 52 million shares, or $1.3 billion.

"It's a big deal," a source said. "[The redemption] kind of goes in line with what management has been saying."

The source said the preferred stock closed weaker at $25.24, down from $25.33 on Friday.

He added that the losses were due to the fact that the preferreds are being called at $25.00.

Yield to call, however, was 1.34%, he said.

"For basically one-month paper, that's not so bad - Libor plus 109 [basis points] for good quality paper."

The preferreds have been callable since 2006, he said.

The source also noted that the issue was the day's most active, with just over 1 million shares changing hands.

"People are going, 'OK, on to the next deal,'" he said.

Elsewhere in financials, Citigroup Inc.'s 8.5% series J preferreds traded up a nickel to $24.45, a source said. The series J shares were the day's second most active issue.

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