Southern Union preferreds slip post-Williams bid; RBS creeps upward; Ally volume decreases

By Stephanie N. Rotondo

Portland, Ore., June 24 - It was a "very slow summer Friday" for preferred stocks, a trader reported.

"There was almost no movement at all," the trader continued, as the market was "waiting to see what happens in Europe."

"There was further concerns out of Europe," another trader said. Still, he added that many preferred issues were "up in the later part of the day."

Southern Union Co.'s hybrids gave up a bit of the gains incurred late Thursday. The bonds had improved in the previous session on word that Williams Co. had "made a better bid" for the company, a trader said.

Meanwhile, the turmoil in Europe - specifically Greece and, to some extent, Italy - remained a concern for investors involved in foreign-based issues. Royal Bank of Scotland Group plc in particular is one players are keeping an eye on, though a trader said the preferreds were "holding in" during Friday's session.

The overall quiet market also resulted in muted volume in Ally Financial Inc. paper. Still, the preferreds remained the most active issues of the day.

Southern Union gives back

A trader said Southern Union's 7.2% hybrid notes due 2066 came off a bit as Williams aimed to take over the company.

He quoted the notes at 93¼ bid, 93½ offered, down from previous levels around 94. On Thursday, the bonds had popped up from the 91 area to around 94 on the back of Williams' all-cash $8.7 billion bid.

Williams is attempting to outbid Energy Transfer Equity LP. For its part, Energy Transfer is contending that its proposal is better and provides better value.

"Furthermore, the Williams proposal does not have committed financing, may have negative ratings consequences for SUG, is subject to completion of due diligence and may have material antitrust regulatory challenges," Energy Transfer said in a statement Friday.

Southern Union said it would review Williams' bid "in due course."

The natural gas company is based in Houston.

RBS inches higher

News that Greece had comes to terms on a five-year austerity plan that includes deep spending cuts and tax hikes did little to assure the markets Friday.

While the market was "waiting to see what happens in Europe," as one trader put it, many continued to wonder how the turmoil would affect European names, particularly foreign-based banks such as Royal Bank of Scotland.

"European names are becoming less attractive," a trader said. He noted that while RBS paper was "holding in ... it could get hit at some point in time."

RBS' series T preferreds (NYSE: RBSPT) closed 2 cents higher at $18.18. The paper traded in a range of $18.05 to $18.20 during the session.

Ally volume slips with market

With the broader market in a holding pattern, even market-dominating Ally Financial was on the quiet side, though its preferreds were still the day's most actively traded issues.

The 8.125% series B preferreds took the top spot from their 8.5% series A counterparts. The Bs (NYSE: ALLYPB) closed a penny weaker at $24.39 on volume of about 537,000 preferreds. The As (NYSE: ALLYPA) meantime ended steady at $24.80 on volume of about 255,000 preferreds.

Allianz trades up

A trader said Allianz SE's preferreds "look good," seeing the paper trade higher between $26.20 and $26.30.

Another trader said the preferreds closed 11 cents higher at $26.10 bid, $26.20 offered.

Allianz is a Munich-based insurance company.

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