Search for Boston Marathon bombing suspect takes market's focus; S&P rebalance shuffles paper

By Stephanie N. Rotondo

Phoenix, April 19 - A preferred stock trader said it was slow-going Friday as "everyone is focused on this manhunt" for a suspect in the Boston Marathon explosions.

No new deals were announced, but more were expected in the coming week.

"We're probably going to see quite a few deals next week," a trader said. Though he had no specific names, he opined that many would be financials.

After the market closed, a market source said the day was "an odd one."

For most of the day, he explained, the preferred market was up slightly, about 7 basis points to 8 bps. "But in the last 15 minutes, it plunged about 70 bps," he said.

He attributed the hefty dip to Standard & Poor's rebalance of its preferred stock index, which took place Friday. He noted that there were 11 different issues that had volume of 700,000 shares or more.

"Some of that was maneuvering on the part of the ETFs," he said.

The rebalance was announced on April 9 and included the addition of 36 preferred issues. J.P. Morgan Chase & Co.'s 5.45% series P noncumulative perpetual preferreds (NYSE: JPMPA) were among the additions and actively traded during the day, with over 2 million shares changing hands.

The preferreds closed up 12 cents at $25.50.

The shuffle also included the deletion of seven preferred issues.

From Thursday business, Goldman Sachs Group Inc.'s $1 billion of 5.5% series J fixed-to-floating-rate noncumulative preferreds were "trading up quite a bit," according to the trader at midday. He quoted the issue at $25.45 bid, $25.50 offered.

At midday on Thursday, the issue was pegged at $25.05 in the gray market.

After the bell, a source quoted the paper at $25.48 bid, $25.53 offered.

"So that's up a lot," he said. He opined that the pop was due to the way the deal was allocated.

"Everybody didn't get what they wanted, so they had to go out and buy more," he said.

The deal priced and freed up on Thursday.

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