First BanCorp soars on financing news; buyers, sellers of RBS preferreds abound; Ally gains

By Stephanie N. Rotondo

Portland, Ore., June 28 - Preferred stocks were trending upward Tuesday, though volumes remained subdued as many market players were "already skipping out early for the holiday," a trader said.

He also noted that with month-end coming up, accounts were not necessarily in a rush to do much.

Another trader said the market had "a nice pop." Still, he said the market was running with a "herd mentality." When one person starts buying, everyone follows, and vice versa.

"Who is leading the herd is the question," he said. "The quarter ends this month, but people are buying because T+3 starts next month."

During the day's session, Puerto Rican bank First BanCorp announced that it had raised enough capital to pay back the U.S. Treasury Department's bailout investment from January 2009. The news was largely viewed as positive, sending the preferreds up as much as 25.5%.

Volume in the name, however, was on the light side.

Royal Bank of Scotland Group plc meantime was a "mixed bag," a trader said. There were both buyers and sellers of paper, the trader explained.

The ever-active Ally Financial Inc. preferreds continued to dominate trading in an otherwise quiet marketplace.

First BanCorp gets a boost

San Juan, Puerto Rico-based First BanCorp said Tuesday that it had secured a $175.5 million investment from two funds managed by Oaktree Capital Management LP.

The investor will purchase common stock at $3.50 per share, which was 12 cents less than Monday's closing share price of $3.62 (NYSE: FBP). The purchase will represent about 24.9% of the bank's outstanding common equity.

The deal is similar to a $180 million stock purchase agreement forged between the bank and Thomas H. Lee Partners last month. That investment also involved a 24.9% stake.

Additionally, First BanCorp has inked deals with other investors for another $164 million of funding. That brings the total new capital to nearly $520 million, well over what it needed to allow the Treasury to convert its $424.2 million of series G mandatorily convertible preferred stock into common shares.

Once that is accomplished and the Treasury sells its stake back to the company, the bank will once again be privately held.

Investor confidence spiked on the news, resulting in decent-sized gains for the company's preferreds.

The series A preferreds (NYSE: FBPPA) gained $2.81, or 19.04%, to close at $17.57. The series Bs (NYSE: FBPPB) experienced above-average volume, with 19,300 preferreds turning over. The Bs increased by $2.71, or 17.96%, to $17.80.

The series C paper (NYSE: FBPPC) improved by $2.67, or 17.91%, to $17.58. The series D perpetual noncumulative preferreds (NYSE: FBPPD) moved up $2.88, or 19.7%, to $17.50, while the 7% noncumulative series Es (NYSE: FBPPE) closed $3.58, or 25.53%, higher at $17.60.

A trader noted that First BanCorp discontinued paying dividends in 2009 after receiving the bailout funds. With a repayment looming, he wondered if and when the company might begin paying out again.

The company did not return calls seeking comment.

Buyers, sellers vie for RBS

As "people were getting bored with Greece," investors were still looking to "limit exposure to Europe," a trader said.

As such, it was a mixed day for Royal Bank of Scotland as both buyers and sellers came to market.

RBS' series L preferreds (NYSE: RBSPL) closed 26 cents higher at $18.00, while the series Ts (NYSE: RBSPT) gained a dime to close at $18.22.

Ally preferreds move up

A trader said Ally Financial's 8.5% series A preferreds (NYSE: ALLYPA) "had a nice day." The preferreds ended 23 cents higher at $25.08. Volume was about 590,000 preferreds.

The 8.125% series B paper (NYSE: ALLYPB) however, "was a little bit of a lagger." That issue finished 13 cents better at $24.42. Volume was about 801,500 preferreds.

Ally Financial is a Detroit-based automotive financial services firm.

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