Domestic bank preferreds up on hopes of European plan; Summit Hotel Properties plans deal

By Stephanie N. Rotondo

Portland, Ore., Oct. 14 - The preferred market was a bit subdued Friday, though domestic bank preferreds were generally rising on hopes Europe will come up with a plan to keep its economic crisis in check.

New details were emerging from a meeting in Paris of European finance officials and bankers that indicated the plan will include deeper losses for private investors, higher bank capital levels and more firepower for bailouts and the International Monetary Fund.

"That helped push our market up," a trader said, as banks like Citigroup Inc. and Bank of America Corp. were gaining ground.

Foreign banks, however, were not following suit.

"Euro names were weaker," a trader said. "It usually is on the weekends. People don't trust the news."

Meanwhile, Summit Hotel Properties Inc. announced plans for a new issue. The new issue market has seen several real estate investment trust deals in the last few months, even as the rest of the new issue market dries up.

Banks mixed on Euro plan

Domestic banks headed into higher territory on hopes that European leaders will iron out a plan as early as next week to shore up their financial system.

Citigroup's 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) were the most actively traded securities of the day, with over 1 million trust preferreds changing hands. They rose 14 cents to $25.71.

Bank of America's 8.2% series H depositary shares (NYSE: BACPH) also gained 14 cents, closing at $22.57.

Foreign issuers were another story.

HSBC Holdings plc's 8% exchangeable perpetual subordinated capital securities (NYSE: HCSPB) fell 18 cents to $25.49 while Barclay plc's 8.125% series 5 noncumulative callable dollar preference shares (NYSE: BCSPD) dropped 8 cents to $23.80.

Also down were ING Groep NV's 8.5% perpetual hybrid capital securities (NYSE: IGK), which lost 55 cents, or 2.37%, ending at $22.70.

Summit to bring deal

Summit Hotel Properties said Friday it plans to sell up to $57.5 million of series A cumulative redeemable preferreds.

Traders spoken to by Prospect News had not seen any price talk on the deal.

Earlier in the week, Ashford Hospitality Trust Inc. priced an add-on to its 9% series E preferreds. Other REITs, including STAG Industrial Inc., are currently in the market shopping deals.

Other sectors have remained remarkably silent in the new issue market, and traders have said that the appetite for REIT paper is high.

Regions active, up

A trader said Regions Financial Corp.'s 6.625% $1,000-par trust preferreds were "active for the fist time in a while."

He said the issue was "up on the day," trading in an 82-82.75 context. He called that a gain of "2-plus points."

"They had gotten pretty beaten up," he added.

Regions is based in Birmingham, Ala.

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