Midday Commentary: First Republic planning sale of noncumulatives; RBS declines amid speculation

By Stephanie N. Rotondo

Phoenix, Oct. 21 - The preferred stock primary market was showing signs of life on Monday.

First Republic Bank announced a sale of series E noncumulative perpetual preferreds early in the session. A trader said price talk was adjusted to 7.125% to 7.25%, down from 7.25% to 7.375% originally.

"It's still bid for at [$24.92]," he said. "So people still want it. It's a good company, a pretty solid regional bank. And it's investment grade, too."

The secondary market was meantime on the softer side.

The Wells Fargo Hybrid and Preferred Securities index was down 17 basis points as of midday.

Royal Bank of Scotland Group plc paper was also weaker, as the U.K.-government said a decision on whether to split the Edinburgh, Scotland-based company into a "good" and "bad" bank was imminent.

The 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) were off 33 cents, or 1.52%, as of midday, trading at $21.37. The 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) leaked about 38 cents, or 1.74%, to $21.22.

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