Avoidance of fiscal cliff boosts preferreds in first trading day of 2013; RBS issues gain

By Stephanie N. Rotondo

Phoenix, Jan. 2 - The preferred stock market was on the rise Wednesday, the first trading session of 2013.

"Since they fixed the cliff issue, preferreds have jumped up here," one trader noted, referring to a last-minute deal on the fiscal cliff that avoided across the board tax increases and massive spending cuts.

The trader also pointed out that uncertainty over dividend taxation was cleared up, as the rate increased to 20% from 15%.

"That's kind of what everyone expected," he said, seeing a continued hunt for yield in the preferred arena.

And, with the dividend tax question answered and interest rates expected to stay at current low levels, the new issue calendar should be jam-packed in 2012, the trader opined.

"It'll probably start up next week," he speculated.

As for the day's dealings, Royal Bank of Scotland Group plc was dominating trading, with most issues putting on over 1% on the day.

RBS active, firm

RBS was posting sizable percentage gains on Wednesday, as issues rose anywhere from to 0.45% to over 3%.

Of the most active issues - RBS was dominating overall trading - the 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) rose 28 cents, or 1.17%, to $24.19. The 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) gained 43 cents, or 2.078%, ending at $21.15.

RBS is an Edinburgh-based bank.

SunTrust gets a boost

SunTrust Banks Inc.'s 5.875% series E noncumulative perpetual preferreds were "finally gaining ground," according to a trader.

He quoted the issue - which priced Dec. 13 - at $24.64 bid, $24.68 offered at midday.

The issue listed on the New York Stock Exchange late last week. The ticker symbol is "STIPE."

At the close, the issue was seen at $24.61, up 14 cents.

SunTrust is based in Atlanta.

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