Goldman Sachs' new issue steady; ING preferreds up on reorganization news; Fifth Third mixed

By Stephanie N. Rotondo

Portland, Ore., Oct. 20 - After gyrating throughout the session, preferred stocks ended generally higher on Thursday.

One market source said the modest gains were due to "cock-eyed optimism from Europe" despite word that European leaders will likely not come to terms on a plan to shore up its banks or Greece by this weekend.

Goldman Sachs Group, Inc.'s recent new deal - a $500 million issue of "baby bonds" that priced Wednesday - was not much changed from the previous session, leading some to opine that the new debt was not doing well.

Meanwhile, ING Groep NV's preferreds were trading higher on news that the Amsterdam-based financial services company is planning to reorganize some of its investment banking units.

And, despite reporting earnings that were more than double the results from the same quarter of 2010, Fifth Third Bancorp saw its preferreds decline.

Goldman issue not rocking

Goldman Sachs priced a $500 million issue of 6.5% $25-par senior notes due 2061 on Wednesday.

Though pricing came at the low end of price talk, one trader said the deal was "priced too aggressively. It took a lot of institutional guys out of it."

The new issue had not freed to trade on Thursday and was still hanging around the levels seen on Wednesday in the grey market.

One trader placed the paper at $24.60.

Another market source quoted the notes at $24.60 bid, $24.68 offered, up from earlier levels around $24.58 bid, $24.65 offered.

He said it was apparent the deal was not going well, "not at those prices."

On Tuesday, the investment banking and financial services firm posted a third-quarter loss of $393 million, or 84 cents per share. That compared to a profit of $1.9 billion, or $2.98 per share, the year before.

ING paper gains

ING preferreds "were up," a market source said, as the company said it plans to reorganize and shutter some of its investment banking units.

"I wouldn't say huge," the source said of the gains, adding that "volume was OK."

The 8.5% perpetual hybrid capital securities (NYSE: IGK) closed up 22 cents at $23.26, while the 7.375% perpetual hybrid capital securities (NYSE: IDG) moved up 16 cents to $20.11.

The board of trustees of ING Investors Trust and ING Variable Funds have together approved a proposal to reorganize the ING Core Growth and Income Portfolio into the ING Growth and Income Portfolio, according to a 497 filing with the Securities and Exchange Commission.

If shareholders approve the reorganization, it will become effective after the close of business on Dec. 2, at which time shareholders of the ING Growth and Income Portfolio will hold a number of shares in that trust equivalent to their number of shares held previously in the ING Core Growth and Income Portfolio. The ING Core Growth and Income Portfolio, which is currently open to new investments, will no longer be available to investors.

Fifth Third mixed post-earnings

Fifth Third's preferreds traded down modestly, though in active trading, after the company reported its third-quarter results.

The 7.25% trust preferreds (NYSE: FTBPB) fell a penny to $25.08.

The 7.25% series A trust preferreds (NYSE: FTBPA), however, rose 3 cents to $25.10, though on significantly less volume.

The Cincinnati-based bank posted earnings of $373 million, or 40 cents per share, for the quarter ended Sept. 30. That compared to a profit of $175 million, or 22 cents per share, the year before.

The gains were due in part to a 4% increase in net interest income.

"We continue to see business activity in our markets that, while not robust, has been more than sufficient to support solid loan growth and strong earnings results," Keith Kabat, president and chief executive officer, said in a statement. "Given our strong capital position and strong levels of profitability, we expect to be well-positioned to continue to prudently increase the capital we return to shareholders."

Charge-offs fell 73% to $262 million, the lowest level in over four years.

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