Morning Commentary: Preferred stocks edge higher; Bank of America frees to trade; Citigroup rises

By Stephanie N. Rotondo

Seattle, April 19 – The preferred stock market was inching upward in early Tuesday trading.

The Wells Fargo Hybrid and Preferred Securities index was up 13 basis points at mid-morning.

Despite the firm tone, a trader said morning activity was dragging.

“I’m hearing rumblings of a new deal, but no name,” he added.

As for Monday’s new issues, Bank of America Corp.’s $900 million of 6% series EE noncumulative perpetual preferreds had freed from the syndicate as of mid-morning, according to a trader.

The trader pegged the issue at $25.15 bid, $25.17 offered.

The deal came via BofA Merrill Lynch and was upsized from $250 million. Price talk was initially around 6.125% but was later tightened to 6%.

Meanwhile, Citigroup Inc.’s $1.5 billion of 6.25% $1,000-par fixed-to-floating rate noncumulative preferreds were seen at 102.25 bid.

Price talk on that issue was initially around 6.5%.

Citigroup Global Markets Inc. ran the books.

Dividends will be fixed and payable semiannually through Aug. 15, 2026. At that point, the paper will begin to pay quarterly dividends at a rate equal to Libor plus a spread of 451.7 bps.

Looking ahead, a trader noted that the Women’s Syndicate Association’s annual Spring luncheon will take place on Thursday. That could weigh on liquidity at the end of the week.

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