Preferred stock market gains ground as quarter ends; Seaspan notes doing well; Wells gets busy

By Stephanie N. Rotondo

Phoenix, March 31 - The month-end session started out on the quiet side for preferred stocks, a trader said.

"It was a busy day in spots, but not overly busy for the market overall," another market source said.

The Wells Fargo Hybrid and Preferred Securities index was up 32 basis points at mid-morning and climbed up even higher to end 48 bps firmer.

One trader was surprised that the primary pipeline was not growing, as he believed the market was in the right position to take advantage of a heavy deal flow.

"Especially after the stress tests," he said, noting that it is usually the case that banks will call older issues and then issue "true preferreds" in their place. But since the results came out, Citigroup Inc. was the only one to announce a large call.

However, the bank has not announced a new issue.

Another source also said he was surprised at the lack of issuance, though he opined that "we're not likely to have any new deals from the banks" for the next month or so, given that Monday was quarter-end and that financial institutions will begin releasing earnings on April 11.

"So nobody is going to want to issue right in front of that," he said. "After that, we could see another flurry of U.S. Banks issuing."

From last week's business, Seaspan Corp.'s $300 million of 6.375% $25-par notes due 2019 were seen in a $25.20 to $25.40 range early in Monday trading.

By the close, the paper was deemed up 32 cents at $25.45. But a source said the closing price might be "misleading," opting instead the volume weighted average price of $25.26.

The deal priced late Thursday and freed to trade early Friday.

Quarter ends, preferreds gain

With Monday being the last day of the quarter, some preferred issues saw a spike in activity as investors jockeyed their positions around.

Wells Fargo & Co.'s 5.85% series Q fixed-to-floating rate noncumulative preferreds (WFCPQ) saw massive trading, with well over 9 million shares being exchanged. The issue closed up 10 cents at $24.90.

"It was the busiest trading day since July of last year [for the issue]," a source noted, adding that the 10-cent gain was "in line" with the market's general performance.

Meanwhile, Morgan Stanley & Co. Inc.'s 6.875% series F fixed-to-floating rate noncumulative preferreds (NYSE: MSPF) gained 8 cents to close at $25.90.

Goldman Sachs Group Inc.'s 5.95% series I noncumulative preferreds (NYSE: GSPI) rose 2 cents to $23.05, as Allstate Corp.'s 6.625% series E fixed-to-floating rate noncumulative preferreds (NYSE: ALLPE) climbed up 8 cents to $25.16.

And, JPMorgan Chase & Co.'s 6.7% series T noncumulative preferreds (NYSE: JPMPB) ended up 13 cents at $25.40.

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