Citigroup preferreds end mixed; Montpelier to bring new issue; Public Storage preferreds slip

By Stephanie N. Rotondo

Portland, Ore., May 2 - The first trading session of the month saw "spotty action" in the preferred stock market, a trader said.

Citigroup Inc.'s preferreds were busy, though they were trading with "no particular theme," according to a market source. Also in the financial realm, Ally Financial Inc.'s series A preferreds were - for once - not the most actively traded security, although they did "break out to the upside," a trader said.

The market is expecting a new issue from Montpelier Re Holdings Ltd. to price soon, and talk is "whispered" in the 9% area, a source said. The source also implied that the deal might grow.

Last week, Public Storage said it sold $30 million of its 6.5% series Q preferreds under a partially exercised greenshoe. A trader said the shares were down on the day but noted that they were trading above par, "which is a good sign."

Citi closes mixed

A trader said there was "no particular theme" in the trading of Citigroup's preferreds, seeing the 6% series Q preferreds and 8.5% series J preferreds falling and the 7.875% series N shares gaining.

The series Qs dropped 16 cents to $22.49, and the series Js fell 9 cents to $26.36.

The series Ns, however, moved up 11 cents to $27.87.

"The Citi Ns will do better because it is the only issue that can't be called" before January 2013, when the Dodd-Frank regulations go into effect, the trader said.

Ally breaks out

Ally Financial's 8.125% series A preferreds experienced a "break out to the upside," a trader said, though there was "no particular reason why."

He opined that whomever was "leaning" on the preferreds around the $26.00-mark sold off their holdings, allowing for some strength to come in.

He said the As had been trading between $25.95 and $26.00 for over a week but closed Monday up 24 cents at $26.20.

Montpelier deal to come

In the new issue realm, Montpelier Re Holdings said Monday it planned to sell shares of its non-cumulative series A preferred stock.

According to a market source, the deal is being "whispered" in the 9% area, "which generally means that it will price in the high 8s."

The source said 3 million preferreds are expected to be sold at par of $25 for an issue size of $75 million. However, he implied that the deal might grow if demand is there.

He quoted the paper at $24.77 bid, $24.83 offered in the gray market.

Montpelier Re is a Bermuda-based reinsurance company.

Public Storage dips

Public Storage's 6.5% series Q preferreds traded down Monday after the company said on Friday it sold another $30 million of the preferreds.

A trader said the add-on was simply the deal's greenshoe.

Before the greenshoe was exercised, the trader said the preferreds were trading between $24.90 and par. The shares then jumped above par on the news Friday.

Come Monday, however, the Qs fell 24 cents to close at $25.02.

Still, "it has broken par, which is a good sign," the trader said. "It probably means it is all sold."

Public Storage is a Glendale, Calif.-based real estate investment trust specializing in public storage options.

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