Midday Commentary: Preferreds soften with market; Wells Fargo dips below par; Synovus running up

By Stephanie N. Rotondo

Phoenix, July 24 - Preferred stocks were giving back some recent gains on Wednesday as the long Treasury bonds declined.

"Housing numbers were better, the economy is getting stronger," a trader said. Recent economic data seemed to suggest that the Federal Reserve would "tighten interest rates sooner than later" and could even begin tapering its bond repurchase program as soon as September.

If that's the case, the trader said, the preferred market could see a sell-off.

Signs of that potential sell-off were being seen in Wells Fargo & Co.'s $1.5 billion issue of 5.85% series Q class A fixed-to-floating rate noncumulative preferreds (NYSE: WFCPQ). The paper traded below par by midday, with a trader quoting the issue at $24.93 bid, $24.94 offered.

The issue priced July 15 and listed on the New York Stock Exchange on Tuesday.

However, Synovus Financial Corp.'s $130 million of 7.875% series C fixed-to-floating rate noncumulative preferreds - a deal that priced Monday - continued to run up. A trader said there was an early trade at $25.75, with shares being offered at $25.85 at midday.

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