PNC Financial's issue lists on NYSE; hopes of renewed dividends spur gains in RBS preferreds

By Stephanie N. Rotondo

Portland, Ore., May 1 - Preferred stocks firmed in the first trading session of the month, according to market sources.

However, aside from recent new deals and Royal Bank of Scotland Group plc, there was "not a lot" of volume, a source remarked.

Among recent new deals, PNC Financial Services Group, Inc.'s series P preferreds officially listed on the New York Stock Exchange. The preferreds were seen trading higher after losing ground on Monday.

In secondary dealings, Royal Bank of Scotland paper was up 5 to 10 cents on the day in active trading. A source said the gains were driven by earnings expectations as well as anticipation of a dividend update.

PNC's new deal lists

PNC Financial Services Group's 6.125% fixed-to-floating-rate series P noncumulative perpetual preferreds listed on the NYSE Tuesday. The ticker symbol is "PNCPP."

At midday, the preferreds were trading around $25.33, according to one trader. At the close, a source placed the issue at $25.37, up 7 cents on the day.

The $1.5 billion issue priced April 19.

Other recent deals also saw active dealings.

BB&T Corp.'s new 5.85% series D noncumulative perpetual preferreds - a deal that priced Thursday and freed from the syndicate on Friday - fell 4 cents to $24.96, according to a source.

U.S. Bancorp's 6.5% fixed-to-floating series G noncumulative perpetual preferred stock (NYSE: USBPN) gained a dime, closing at $25.90.

RBS gains on dividend hopes

The preferred market is eagerly awaiting an earnings call from Royal Bank of Scotland later this week. On the call, the Edinburgh-based bank is expected to provide an update on its preferred dividends. As such, the preferreds have been grinding higher.

"All of them were up between 5 and 10 cents," a market source said.

The 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) moved up a dime to $17.20, while the 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) gained 9 cents, closing at $14.35.

The 6.4% series M noncumulative dollar preference shares (NYSE: RBSPM) improved by a nickel, ending at $16.75, and the 5.9% noncumulative guaranteed trust preferreds (NYSE: RBSPE) closed 10 cents better at $14.31.

RBS has previously said that it would give an update on its preferred dividend payouts during its quarterly conference call. The market is "pretty confident" that the bank will report that it is turning dividends back on for certain issues that are mandatory no-pays, according to a source.

Ally up on upgrade

Late Monday, Standard & Poor's announced that it had altered its rating methodology for financial company preferreds, which gave names like Ally Financial Inc. a boost come Tuesday.

The 8.125% series 2 fixed-to-floating-rate trust preferreds (NYSE: ALLYPA) inched up 3 cents to $23.98, and the 8.5% series A fixed-to-floating-rate perpetual preferreds (NYSE: ALLYPB) gained 10 cents, finishing at $22.50.

In a release out Monday, S&P said it changed the way it rates the preferreds of financial companies like Ally, American Express Co., National Rural Utilities Cooperative Finance Corp., Nelnet Inc. and SLM Corp. A source said the change "essentially applied the hybrid preferred rating methodology used for banks to finance companies."

For its part, Ally's rating was upgraded to CCC+ from CCC.

Zions to redeem series Es

Also late Monday, Zions Bancorporation said it plans to redeem its 11% series E resettable noncumulative perpetual preferreds using proceeds from an online auction of new preferreds that was set to begin Tuesday.

The series E preferreds (NYSE: ZBPF) moved up 2 cents in Tuesday trading to $25.60.

The Salt Lake City-based bank holding company announced after Monday's close that it is auctioning off $143.75 million of 7.9% series F fixed-rate noncumulative perpetual stock. The preferreds will be issued as depositary shares representing a 1/40th interest in a preferred share. The liquidation preference is $1,000 per preferred, or $25 per depositary share.

The depositary shares will be sold via the online auction. The minimum bid price is $23.50, and the maximum price is $25.00.

The results of the auction will determine the final selling price. The auction began at 3 p.m. ET on Tuesday and will close at 3 p.m. ET on Wednesday.

Zions will apply to list the preferreds on the NYSE under the ticker symbol "ZBPF."

Deutsche Bank Securities Inc. is the bookrunner, and Zions Direct Inc. is the auction agent.

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