Morning Commentary: Banks take center stage; Citi, Wells Fargo, Bank of America move up in trading

By Christine Van Dusen

Atlanta, Oct. 15 – Banks were in the spotlight in preferred trading on Thursday as Citigroup Inc. was the latest to release third-quarter earnings, this time reporting that the financial services company beat expectations with a 50% increase in profit.

In response, Citigroup Capital XIII’s 7 7/85% fixed-to-floating rate trust preferred securities rose to $25.99 on Thursday morning, up 7 cents.

“We expected there might be some possible new issues out of banks, because of earnings, but they haven’t announced that and probably won’t for the rest of the week,” a trader said. “I think maybe it’s the mixed economic news, with the focus on whether there will be a rate hike this year and the debt hangover.”

Other banks recently released earnings, including Wells Fargo & Co., which saw its 6% series V class A noncumulative preferreds (NYSE: WFCPV) trade Thursday morning at $25.75, slightly better than $25.73 previously, after reporting an increase in profits.

The bank’s 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) traded Thursday morning 2 cents higher at $25.64 after Wednesday’s $25.62.

Bank of America Corp. also reported on Wednesday an increase in profits, and saw its 6.5% series Y noncumulative preferreds (NYSE: BACPY) edge up to $25.71 on Thursday from $25.68.

In other preferreds trading on Thursday, Houston-based Targa Resources Partners LP’s 9% fixed-to-floating rate cumulative redeemable preferred units (TGARP) were spotted at $24.90 after the greenshoe was partially exercised on Wednesday, close to the previous closing level.

An additional $15 million of the units was sold via bookrunners Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC. Added to the $110 million initially sold on Oct. 7, total issuance now comes to $125 million.

The over-allotment options allowed for up to $16.5 million of additional units to be sold.

On Wednesday the units from the natural gas and natural gas liquids services company ended the session at $24.91.

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