Midday Commentary: Fed worries, empty desks weigh on preferreds; Integrys' new deal yet to free

By Stephanie N. Rotondo

Phoenix, Aug. 13 - Preferred stocks were selling off Tuesday as investors feared that interest rates could soon rise.

"People are expecting the [Federal Reserve] to start tapering [its bond repurchase program]; they're expecting that to be announced at the next meeting," a trader said.

The trader noted that retail sales - which were "good, or mixed at least" - were also playing a role, as the market believed that back-to-school sales might not be as stellar as hoped.

"There are not a lot of people around," he continued, as kids start going back to school. He said he expected the market to "see a lot of sideways trading until September."

Integrys Energy Group Inc.'s newly priced 6% fixed-to-floating rate junior subordinated notes due 2073 - a $400 million issue that came Monday - was seen offered at $24.68 at midday.

The issue had yet to free from the syndicate, according to a trader.

The deal had initially performed well after Integrys launched the issue at $200 million, trading in a $24.85 to $24.90 context in early Monday trading. But then the deal grew and the paper began to back off.

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