Bank of America, Citi move on analyst talk; Magnum Hunter down after call; overall market up

By Andrea Heisinger

New York, Aug. 24 - There was a better tone on Wednesday for some bank preferreds thanks to comments from analysts.

A market source said that outstanding paper from Bank of America Corp. was "trading up" generically based on the comments. Citigroup Inc. preferreds also made moves based on similar comments from analysts.

There was also some movement seen in paper from Magnum Hunter Resources Corp. following a conference call on Tuesday during which the chief executive officer addressed concerns about the company's preferred stock.

The new deal market continued to be shut down, and a source said there "won't be any [new deals] for a while."

The preferred market as a whole had an "up day for the first time in a while," a trader said. Prior to Wednesday, the last day with significant improvements from open to close was Aug. 15, he said.

"It was a largely upward trend open to close," he said. "The market was up 1.24%, so basically 30 to 31 cents on average."

Bank of America, Citi gain

Preferreds from both Bank of America and Citigroup were reportedly better in trading based on several analysts' comments about the state of the financials.

"They're selling crazy at the moment," one source said of Bank of America shares. "The commons are up 9%, and overall I'd say they're up 50 to 70 cents a share."

Meredith Whitney and analysts from Raymond James and Nomura said that the recent market sell-off in stocks from banking names was too much and that the liquidity of many banks is better than people's perception.

Also getting a boost were preferreds from Citigroup, which the market source said "had moved up a little bit" overall.

This was after analyst Glenn Schorr from Nomura Securities said that Citigroup stock is a better bet than Bank of America based on liquidity and other financial factors.

Magnum Hunter suffers

After a Tuesday conference call during which CEO Gary C. Evans said Magnum Hunter Resources is doing fine and has adequate liquidity, the company's preferreds suffered in trading, a source said.

"They got beat up," he said. "The call did ease liquidity fears."

On the "impromptu" call, Evans said, "There's a lot of squawk out there about us not having enough liquidity."

There is also chatter that the company might not be able to pay its dividends on the two series of preferreds: the 10¼% series C cumulative preferreds and the 8% series D cumulative perpetual preferreds.

"Magnum Hunter, as we sit here today, has $80 million of liquidity," Evans said. That includes $60 million available via credit lines and $20 million via a new pipeline facility.

"Our [capital expenditure] budget of $255 million is right on target," he added.

Banks most active

Traders said that the preferreds of Bank of America, Citigroup and their subsidiaries were among the day's most active preferreds on the analyst comments.

Bank of America's series H preferreds were the most active at the close with 1.79 million preferreds changing hands. They closed at $22.36, an increase of 97 cents, or 4.5%, on the day.

Next most liquid were Citigroup's series N preferreds. Volume was 1.11 million preferreds, and they closed flat at $25.35.

The day saw 562,000 of Bank of America's series B Countrywide preferreds trade. They increased by $1.30, or 6.72%, to close at $20.65.

Another issue from Citigroup, its series J preferreds, fell 13 cents to $24.87 on volume of 503,000 preferreds.

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