Morning Commentary: Investors await word from FOMC; BofA preferreds tick higher; Zions lifts

By Christine Van Dusen

Atlanta, April 27 – The preferred stock market was in a state of quiet anticipation on Wednesday morning as investors awaited the results of the Federal Reserve’s two-day meeting on monetary policy and interest rates.

“People are waiting to see what the Fed says today,” a trader said. “I hear there’s a possibility of a couple deals next week, but no names yet.”

Among recent deals, Bank of America Corp.’s $900 million of 6% series EE noncumulative preferreds – a deal that priced April 18 – traded on Wednesday morning at $25.14 after moving as high as $25.17 on Tuesday and closing that day at $25.12.

The stock listed on the New York Stock Exchange on Tuesday under the ticker “BACPA.”

Customers Bancorp Inc.’s $50 million of 6.45% series E fixed-to-floating rate noncumulative preferreds that priced Thursday were seen Wednesday at $25.10, unchanged from Tuesday’s close.

“Nothing much happening there,” the trader said.

In other news, Salt Lake City-based Zions Bancorporation’s 6.3% $25-par series G fixed/floating-rate noncumulative perpetual preferred stock (NYSE: ZBPG) was spotted Wednesday morning at $26.70, up 7 cents, after a late-Monday announcement of a tender offer.

On Tuesday the notes were seen moving up 26 cents to $26.65.

The company is tendering for up to $120 million of its preferreds, including up to $35 million of its $125.22 million outstanding 5.8% $1,000-par series I fixed/floating-rate noncumulative perpetual preferred stock, up to $55 million of its $195.15 million outstanding 7.2% $1,000-par series J fixed/floating-rate noncumulative perpetual preferred stock and up to $30 million of the aforementioned series G stock.

Each offer will remain open until 11:59 p.m. ET on May 20. The offer range is $955 to $980 for the series Is, $1,055 to $1,080 for the series Js and $26.30 to $26.85 for the depositary shares representing the series Gs. For each series, Zions will select the lowest price within the applicable offer range that will allow it to stay at or below the cap for that series.

The company will also pay accrued dividends up to but excluding the settlement date, which is expected to be May 24.

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