Preferreds soften; PNC frees to trade; recent deals at, above par; Deutsche drifts off

By Stephanie N. Rotondo

Seattle, Oct. 28 – It was slow going in Friday trading in the preferred stock market, a trader reported.

“It’s light but slightly down in secondary trading,” he said, “which it should be, with the bond market selling off.”

The Wells Fargo Hybrid and Preferred Securities index waned 34 basis points. The index was down 13 bps at mid-morning.

PNC Financial Services Group Inc.’s $525 million of 5% $1,000-par series S fixed-to-floating rate noncumulative preferreds freed to trade in early dealings, according to a trader.

The deal came Thursday, upsized from $500 million and in line with the revised 5% talk. Initial price talk was 5.125%.

A market source placed the issue at 100.125 at the bell. Earlier in the day, a trader said the paper was “right around par,” in a 99.875 to 100.125 context.

From Tuesday, M&T Bank Corp.’s $500 million of 5.125% $1,000-par series F fixed-to-floating rate noncumulative perpetual preferred stock was “still hovering above par,” a trader said, at 100.5.

Another source saw the issue trade up to 101.

And from Monday’s business, People’s United Financial Inc.’s $250 million offering of 5.625% $25-par series A fixed-to-floating rate noncumulative preferreds were pegged at $26.20 bid.

“They left a lot of money on the table,” a trader said, referring to the new issue’s sizable run-up since pricing.

The paper closed at $26.18.

And, Charles Schwab Corp.’s ’s $600 million of 4.625% $1,000-par series E fixed-to-floating rate noncumulative preferreds – also priced Monday – were quoted at 99.625 bid, par offered.

Deutsche Bank declines

Deutsche Bank AG’s trust preferreds were weaker Friday, though the troubled German bank reported a surprise third-quarter profit on Thursday.

The 8.05% TruPs (NYSE: DKT) fell 26 cents, or 1.04%, to $24.69. The 7.6% TruPs (NYSE: DTK) slipped 11 cents to $24.34.

The company reported a profit of €278 million, which compared to a loss of €6 billion the year before.

However, concerns remain over the proposed $14 billion settlement with the Department of Justice over activities related to the company’s dealings with mortgage-backed securities and how that might have impacted the 2008 financial crisis.

Deutsche Bank has said it would not accept the $14 billion proposal but that it would negotiate terms that were similar to that reached with its peers.

While investors were hoping for a quick turnaround on the deal, it was reported earlier in the month that a settlement might not come until January.

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