ING suffers more than other foreign issuers; Bank of America falls; Digital Realty prices

By Stephanie N. Rotondo

Portland, Ore., Sept. 8 - Preferred stocks were weaker Thursday though up from their intraday lows.

"We didn't close at the absolute low of the day, but we were close," a market source said.

"Everything kind of trickled down today," said a trader, as people were "waiting for more volatility or for more market direction."

"Everyone is waiting for the next European shoe to fall," said another trader.

It was expected that foreign issuers would get a boost after a German court paved the way for the country to participate in bailouts on Wednesday. However, the boost didn't come, and it was ING Groep NV that bore the brunt.

"ING preferreds sold off a bit more than other issues," a trader said. Another source agreed that was the case, though he had no explanation why it was so.

"European banks had a very volatile day," the source conceded. As far as ING specifically, "I'm not aware of anything new," he said.

Bank of America Corp. was one of the most traded securities of the day, and the preferreds were mostly lower. A trader noted that the bank's top executive had said he was attempting to downsize operations, giving credence to rumors of massive layoffs and branch closures.

"That could be good for the company," the trader said. "They could cut a lot of costs that way."

In the new issue realm, Digital Realty Trust Inc. priced a new $250 million issue of preferreds. The market had been expecting just $100 million, but a trader said that there was "a good amount of REIT appetite."

ING hit harder than most

With no fresh news out to act as catalyst, ING Groep's preferreds suffered more than other foreign banks during Thursday's session.

"It seems like there should be news when they are that much lower," a market source said, stating that he had not seen anything in the name.

However, he added that he would "emphasize that it's on modest volume."

The 7.2% perpetual debt securities (NYSE: INZ) were the most active of the ING complex, with nearly 223,000 preferreds trading. They were down 58 cents, or 2.73%, at $20.68.

The 8.5% perpetual hybrid capital securities (NYSE: IGK) were also modestly active, falling 44 cents, or 1.8%, to $23.96.

ING is an Amsterdam-based financial services firm.

Bank of America softens

A trader said that comments made by Bank of America's chief executive officer regarding an attempt to downsize the company could be viewed as a positive.

However, another trader opined that the consolidation was "more of a contingency plan ... if they can't figure it out and they are hit with a bunch of lawsuits."

The 8.2% series H depositary shares (NYSE: BACPH) traded in good size, though not nearly as much as has been typical recently. The shares slipped 42 cents, or 1.75%, to $23.62.

Digital Realty prices

Digital Realty Trust priced a $250 million issue of 7% series E cumulative redeemable perpetual preferreds on Thursday.

According to one trader, the deal was "no surprise," as there is a "good amount of REIT appetite."

He said he saw the new issue trading between $24.80 and $24.90 in the gray market. Another trader placed the issue around $24.90.

The new issue follows one done by Associated Banc-Corp on Wednesday. The company said it would use proceeds, combined with proceeds from a notes offering, to repay TARP funds.

A trader said that market chatter is that more banks needing to repay government bailout funds will begin coming to the preferred market to raise the necessary capital.

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