Citigroup preferreds little changed on surprise CEO exit; Urstadt Biddle Properties on tap

By Stephanie N. Rotondo

Phoenix, Oct. 16 - Preferred stocks were firm Tuesday and overall liquidity "was improved," according to a market source.

The big news of the day was Citigroup Inc.'s announcement that Vikram Pandit had resigned as chief executive.

In a surprising move, Citigroup announced that Pandit was leaving Tuesday morning, just one day after the company reported better-than-expected earnings. The rumor mill soon began churning out conspiracy theories, such as that Pandit was ousted in order for him to become a fall guy for various legal scuffles the bank could be or already is facing.

Still, the news was deemed a 'non-event" for the preferreds, though the paper was trending higher on the day.

Meanwhile, Urstadt Biddle Properties Inc. announced a sale of series F cumulative redeemable perpetual preferred stock.

The company said it was issuing 3 million shares, with a 450,000-share over-allotment option. As of press time, however, the deal had not priced.

Pandit exit 'non-event'

Conspiracy theories were abundant Tuesday as the market learned that Citigroup's CEO Pandit was exiting his post.

But one trader opined that there was no conspiracy theory, that it was simply a matter of Pandit wanting more money. The trader noted that Pandit's compensation for the last several years has been $1 per year. While the former CEO likely also has stock in the company, the trader pointed out that the equity has lost 80% since the economic crash.

"I can't imagine it being a bad thing for the company if they want to change management," he said.

"I'm not really surprised," said another market source. "The question is what were the politics behind it."

The source also said that he did not think "it will change anything for them in the near term."

Michael Corbat is replacing Pandit. Corbat had previously been CEO of Citi's European, Middle East and African operations.

Surprising as the news was, there was not too much reaction in Citi's preferreds, though the paper was generally higher.

"It's a non-event for the preferreds," a trader said.

The $100-par 7.5% tangible dividend enhanced common stock (NYSE: CPH) was up 74 cents to $102.36. The 7.875% fixed-to-floating trust preferreds (NYSE: CPN) increased 4 cents to $28.56.

Urstadt plans new issue

Urstadt Biddle, a Greenwich, Conn.-based real estate investment trust, announced plans for the sale of at least $75 million of series F cumulative redeemable preferreds

A trader said he had not seen any price talk on the new issue. In early trading, there was a $24.65 bid in the gray market for paper, which moved up to $24.85 bid at midday. Still, he said he had not seen much actual trading.

BMO Capital Markets is the bookrunner. Stifel Nicolaus & Co. Inc. and Deutsche Bank Securities Inc. are the joint lead managers. Co-managers are Wunderlich Securities Inc., J.J.B. Hilliard, W.L. Lyons, LLC and BNY Mellon Capital Markets, LLC.

Proceeds will be used for general corporate purposes, which may include the redemption or repurchase of other outstanding preferred issues, the repayment of debt, the funding of capital improvements and property acquisitions.

Affiliated, Entertainment list

Affiliated Managers Group Inc.'s $125 million of 5.25% $25-par senior notes due 2022 listed on the New York Stock Exchange on Tuesday under the symbol "AFM," as was expected.

The notes closed at $25.09, down from opening levels of $25.35.

Pricing was Oct. 3.

And, Entertainment Properties Trust's $125 million of 6.625% series F cumulative redeemable perpetual preferred stock is also listed, under the symbol "EPRPF."

The company priced the deal Oct. 4.

The preferreds ended at $24.96, up 6 cents.

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