CoBank plans $100-par noncumulative preferreds; Citigroup posts earnings, preferreds up

By Stephanie N. Rotondo

Phoenix, April 15 - Preferred stocks were only slightly better on Monday, as commodities were volatile.

Explosions at the finish line of the Boston Marathon late in the day also did little to bring investors to the table.

In the primary, CoBank ACB announced a new preferred stock issue on Monday, being the only new deal announced on Tax Day.

A trader said the $100-par perpetual issue was being talked around 6.25%. Pricing was expected Monday or Tuesday, but with the news coming out of Boston, one market source opined it would be put off until Tuesday.

Bank earnings continued to come out, with Citigroup Inc. reporting on Monday. Like Wells Fargo & Co. and JPMorgan Chase & Co., the results beat estimates, but that didn't cause too much reaction in the banks' preferreds.

CoBank's $100-par issue

CoBank, a Denver-based cooperative bank focused on rural America, announced an offering of at least $100 million $100-par series G noncumulative perpetual preferreds on Monday.

Price talk was around 6.25%, a trader reported.

"It looks pretty cheap actually for our world," he said.

He added that he had not yet seen any markets for the paper.

After the close, a market source said he had not seen any markets either, noting that the deal was being marketed primarily to qualified institutional buyers and accredited investors. He also said he had not seen the deal price and speculated that it would not, given the news coming out of Boston.

"I think most people are occupied with other stuff," he said.

BofA Merill Lynch and Morgan Stanley & Co. LLC are the joint bookrunners.

Beginning July 1, 2018, the issue can be called in whole or in part at par plus accrued dividends. Before that date, the preferreds can be redeemed in whole upon the occurrence of a regulatory event.

Proceeds will be used to increase regulatory capital under FCA regulations and for general corporate purposes.

Recent deals firm

Among other recently priced deals, MFA Financial Inc.'s $175 million of 7.5% series B cumulative redeemable preferreds - a deal that came Tuesday - were seen at $25.05 bid as of early Monday trading.

Dynex Capital Inc.'s $50 million of 7.625% series B cumulative redeemable preferreds - a deal that priced Thursday - were seen at $24.80.

Bank earnings help slightly

On the heels of Friday's earnings releases from JPMorgan and Wells Faro, Citigroup brought its latest quarterly report on Monday.

Like its sector peers, overall earnings beat estimates. However, there wasn't much in the way of price movement in the preferreds.

The 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) were up 2 cents to $28.60.

Meanwhile, JPMorgan's 5.45% series P noncumulative perpetual preferreds (NYSE: JPMPA) inched up 2 cents as well, closing at $25.59, while Wells Fargo's 5.25% series P class A noncumulative perpetual preferreds (NYSE: WFCPP) rose a penny to $25.24.

For the first quarter, Citigroup reported a profit of $3.8 billion, or $1.23 per share, a 30% increase year over year. Revenues were $20.17 billion.

Analysts had been expecting $1.18 per share on revenues of $20.17 billion.

On Friday, JPMorgan posted earnings of $6.5 billion, a 33% surge from the year before. While earnings beat estimates, revenues did not.

As for Wells Fargo, it reported a 22% increase in earnings at $5.2 billion.

Both JPMorgan and Wells Fargo said that revenues were stagnating due mostly to a decline in loans. For its part, Citigroup said its revenue growth was not strong, though its total loans increased.

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