Preferreds drift lower; Seaspan reopens 7.95% preferreds, shares plummet; Citigroup busy

By Stephanie N. Rotondo

Phoenix, Nov. 5 - A preferred stock trader said that "everything is slightly off with the long bond" as of midday on Tuesday.

The Wells Fargo Hybrid and Preferred Securities index was trading off 15 basis points shortly before noon ET. A market source said the index had dipped as low as down 22 bps but finished the day at off 15 bps.

The trader said that Seaspan Corp. announced plans early in the session to reopen its 7.95% series D cumulative redeemable preferreds.

The company originally sold $67.5 million of the preferreds on Dec. 6. A $10,125,000 greenshoe was then exercised on Dec. 14, bringing total issuance up to $77,625,000.

News of the add-on offering sent the existing preferreds spinning downward.

The paper (NYSE: SSWPD) was trading down 77 cents, or 3.04%, around midday at $24.60. By the end of the day, the issue had dropped 78 cents, or 3.07%, to $24.59.

"That stock did get hammered," a market source said, adding that he had not yet seen any pricing details. "They are trying to get as much done as possible."

The source also opined that the underwriters will have to sell the additional shares at a discount. "I don't know how they get around not doing that," he said, setting a forecast of $24.50 to $24.75 per share.

The deal did eventually price, with $50 million new shares being sold - surprisingly - at par.

Aside from Seaspan, a trader said there was "no talk of any new deals this week," which he said was "surprising," given chatter from last week about a big deal - likely from a bank - that never materialized.

In other recent deals, City National Corp.'s $100 million of 6.75% series D fixed-to-floating rate noncumulative preferred stock continued to perform well after pricing on Thursday.

A trader saw the issue at $25.25 in early morning trading.

The trader added that the deal had gotten a reporting symbol, "CYNLL."

Citigroup Inc.'s $1.3 billion issue of 6.875% series K fixed-to-floating rate noncumulative preferreds - a deal that came Oct. 24 - was meantime seen "hanging right around par," according to a trader.

The issue has not yet listed, but the trader speculated that "it seems like it should be listing this week."

After the close, another source said the preferreds were once again dominating overall trading, with over 2 million shares being exchanged.

He saw the issue end the day up 2 cents at $24.96.

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