Financials find footing as Greece approves austerity measures; new issue calendar quiet

By Stephanie N. Rotondo

Portland, Ore., Feb. 13 - Preferred stocks were trending higher in Monday trading, and one market source opined the firm tone was the market "largely responding to what it perceives as good news out of Europe."

The news he was referring to, of course, was word that Greece's parliament had approved further austerity measures in an effort to receive a second bailout from the European troika. The austerity vote came as residents of the island nation rioted in the streets.

Still, the market's strength waned slightly toward the end of business as players began to debate the Volcker Rule, a new regulation proposed by Paul Volcker to stem bank's ability to use customer funds to make market bets. Monday was the last day of the comment period for the rule.

Of the day's goings-on in the preferred arena, volume was "on the light side," a source said. With no new issues announced, secondary trading was focused on financials.

Financials mostly firm

Hopes that Greece can turn itself around while also avoiding a sovereign default were helping financial institutions - both foreign and domestic - churn in Monday trading.

Morgan Stanley & Co. Inc.'s 6.25% capital securities (NYSE: MWG) was a big trader during the session, with nearly 483,000 shares turning over. The preferreds gained 45 cents, or 1.86%, to $24.58.

Bank of America Corp.'s Merrill Lynch issues were also trading actively and better. The 8.625% series 8 noncumulative preferreds (NYSE: BMLPQ) moved up 14 cents to $25.06, while the series 4 noncumulative floating-rate preferred stock (NYSE: BMLPJ) improved by 46 cents, or 2.42%, to $19.30.

However, Ally Financial Inc.'s 8.125% fixed-to-floating preferreds (NYSE: ALLYPB) were weaker on the day, slipping a nickel to $21.65.

Among foreign institutions, Royal Bank of Scotland Group plc's 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) inched up 9 cents to $17.50.

A break for new issues

A trader said that he thought the new issue calendar would continue to be busy on Monday, given the news out of Greece. But with no issues announced, he opined that the market "could be real quiet this week."

He noted that the upcoming weekend included a holiday - Presidents Day on Feb. 20 - which could take players out of their desks as early as Thursday. As such, he expected any planned deals to come as soon as possible.

If no new issues surface this week, it will be the first week of the calendar year without any new deals.

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