Preferred stocks sell off following Fed official's comments; CHS deal prices, frees up

By Stephanie N. Rotondo

Phoenix, Sept. 20 - The preferred stock market was "selling off a little bit," a trader said Friday.

At midday, the Wells Fargo Hybrid and Preferred Securities index was down 18 basis points. However, the market clawed its way back some, ending the day down only 2 bps.

Fueling the dip were comments made by James Bullard, president of the Federal Reserve of St. Louis. Bullard said that the central bank could decide to start its stimulus program taper as early as October, after deciding on Wednesday to delay edging the program out.

A trader also noted that it was a little on the quiet side and that many people were out. Some seats were likely empty due to the Jewish holiday, Sukkot.

For instance, Citigroup Inc.'s $900 million of 7.125% fixed-to-floating rate series J noncumulative perpetual preferreds saw trading of only about 474,000 shares during the session, according to a market source. While that was the most actively traded issue of the day, volume was down significantly - since pricing Sept. 12, the issue has seen at least 1 million shares trade each day.

A trader said the issue was trading around "$25.20-ish" bid early in the session. After the bell, a source said the preferreds had dropped a dime to end at $25.25.

The deal was assigned a reporting symbol earlier in the week, leaving sources to opine that the shares will list on the New York Stock Exchange early next week.

The expected symbol is "CPJ."

Meanwhile, CHS Inc. priced a $250 million issue of 7.875% series 1 class B cumulative redeemable preferred stock late Thursday, though details didn't emerge until Friday morning.

Initial price talk was 7.75% to 8%.

Around noon ET, a trader said the deal had not yet freed to trade, seeing paper moving in a $24.85 to $24.87 context.

At the close, another source said the new deal had in fact freed from the syndicate. He saw the preferreds offered at $25.20.

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