Preferreds weaken as debt ceiling woes continue; ING Groep falls with market ahead of earnings

By Stephanie N. Rotondo

Portland, Ore., July 28 - The "Washington hostage negotiations," as one market source called the government's debt ceiling talks, continued to put the preferred stock market in a vice grip Thursday.

"There was a little bit of a rebound followed by a slow, steady decline," another source said.

"Everyone is still waiting on these idiots in Washington to find out which direction they are going to go," said a trader. He said that some market watchers are expecting a 25-basis-point drop in Treasuries if some sort of deal is not inked and that such a fall could have serious side effects for U.S. banks.

"They really don't realize the implications," he said. "Or maybe they do."

Additionally, the lack of clarity regarding the debate was weighing on month-end pricing activities.

"We might see some crazy selling [Friday] afternoon," the trader said. "There could be a pretty steep sell-off in the next day or so."

He said that in the meantime, "no one wants to buy anything and no one wants to sell anything because everything is getting so cheap."

On the plus side, ING Groep NV, among other insurers such as American International Group, Inc., intends to report earnings next week.

The trader said that "could help out a lot once people" get clarity on how the insurance companies are performing.

Still, ING's preferreds, like the majority of the market, fell in Thursday trading.

Meanwhile, Ally Financial Inc.'s series A preferreds were the day's most actively traded issue. The preferreds ended weaker, as did their series B counterparts, though trading in the Bs was "minimal," a source said.

ING falls with market

Next week will see a few insurance giants reporting earnings, ING Groep among them.

A trader expressed optimism that the earnings could help the currently depressed markets.

But ahead of its Aug. 4 reporting date, ING's preferreds followed the trend of the market, closing anywhere from 4 cents to 28 cents lighter.

The perpetual hybrids (NYSE: IGK) declined 9 cents to $25.35. The perpetual debt securities (NYSE: INZ) also lost 9 cents, ending at $23.16.

Another issue of perpetual hybrid capital securities (NYSE: ISF) dropped 17 cents to $21.02.

ING is based in Amsterdam.

Ally As take over

Ally Financial's 8.5% series A preferreds (NYSE: ALLYPA) dominated trading. About 886,000 of the preferreds changed hands, and they fell 8 cents to $25.62.

Traders noted that the 8.125% series B preferreds (NYSE: ALLYPB) went ex-dividend Thursday and, as a result, a market source said the shares fell 47 cents to $24.67.

However, the source noted that there was "minimal volume" in the Bs.

Ally is a Detroit-based financial services firm focused on the automotive sector.

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