National Bank of Greece falls again as Greek restructuring mulled; Citigroup series Hs decline

By Stephanie N. Rotondo

Portland, Ore., June 6 - It was a "mostly red" day for preferred stocks on Monday, according to a market source.

Another trader said that "everybody dumped" on Friday and bought on Monday. "That's what I have been seeing."

National Bank of Greece SA's preferreds dropped in Monday trading after regaining ground during Friday's session. The fall came as the market further contemplated what a restructuring of the country's debt might look like.

Meanwhile, Citigroup Inc. saw its preferreds losing value following news reports on how the Dodd-Frank legislation will affect capital requirements. A trader said Citi was specifically mentioned in a Barron's article over the weekend that discussed potential capital restrictions for banks.

In the new issue realm, Qwest Corp.'s recent new issue of $25-par 7.375% notes moved into higher territory after slipping a bit on Friday. One trader said he heard that there "might be a deal tomorrow via Wells Fargo." Another trader said he heard talk of "a small deal and a large deal this week."

The second trader added that he also heard Wells Fargo was involved in at least one of those transactions.

Greek bank falls again

After regaining some ground on Friday, National Bank of Greece's 9% series A preferreds traded back down. They fell $1.20 to $12.25 (NYSE: NBGPA).

According to a market source, the dip came on the back of a news report by the Wall Street Journal that indicated banks were being "encouraged" to allow the country to skip payments on preferreds and debt.

"It's certainly nothing official," the source said. "It's hard to say exactly what that means, but it's probably not good."

On Sunday, European Central Bank Governing Council member Nout Wellink said that banks are being asked to roll over their Greek debt at maturity, according to Reuters report.

"We are trying, in what is called in official terms the Vienna initiative, to persuade banks to stay in those countries after 2012 and when debt matures to keep active in those countries," Wellink said. "I think the governments of Europe temporarily need to make available some additional refinancing money."

France has already said they approve of such a plan.

"France is favorable to a solution which would involve the private sector in ways that wouldn't endanger the banking sector or the funding of the Greek economy," said an official in the Wall Street Journal on Monday.

On Friday, Greece was given approval to draw on its bailout funds received from the European Union and the International Monetary Fund. However, there are still more hurdles to jump in order for the country to get the needed funds, leaving more uncertainty about whether or not it will get the money.

Citi loses ground

Citigroup's $1,000-par series H capital securities were the day's most actively traded preferred. Nearly 390,000 shares changed hands.

However, the shares fell $3.97 to $114.29 (NYSE: C-PH).

The dip came as investors reacted to comments made Friday by Federal Reserve board member Daniel Tarullo at the Peterson Institute for International Economics in Washington, D.C.

New legislation going into effect under Dodd-Frank does not account for how banks must carry additional capital, and Tarullo suggests that the appropriate method should be based on how important the specific institution is to the overall economy.

Tarullo also remarked that the capital should be of high quality.

"There is this feeling that it is going to push for more [preferred] issuance to happen in the private sector," a trader said.

Also in the financial space, Royal Bank of Scotland plc's series T preferreds slipped a penny to $19.75 (NYSE: RBSPT)

Qwest moves back up

Qwest's new issue of 7.375% $25-par notes due 2051 traded back up to $24.90, according to a trader.

The bonds traded in a $24.70 to $24.80 context on Friday.

Another trader quoted the notes at $24.90 bid, $24.94 offered.

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