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Preferreds continue to rise; First Republic's new 7% noncumulatives free up; RBS sinks further
By Stephanie N. Rotondo
Phoenix, Oct. 22 - The preferred stock market saw "light volume" on Tuesday but was "creeping up" nonetheless, according to a trader.
"Everything has caught a bid, and there's a lot of green on the board," he added, noting that the market has been performing better since the government averted hitting the debt ceiling. "Today's economic numbers are driving the [Treasury] bond market up, so that helps as well."
The Wells Fargo Hybrid and Preferred Securities index was up 49 basis points as of midday. By the end of business, it was up 48 bps, or 12 cents on average for $25-par paper.
In primary dealings, a trader reported that First Republic Bank's $200 million of 7% series E noncumulative perpetual preferreds, a deal that priced Monday, had freed to trade as of early Tuesday.
He quoted the issue at $25.05 bid, $25.10 offered at midday. After the close, another source pegged the preferreds at $25.03 bid, $25.08 offered.
A trader also remarked that he was not hearing of any other deals coming this week.
RBS remains weak
Royal Bank of Scotland Group plc preferreds continued to decline Tuesday. The securities were down in Monday trading in response to a news article out late Friday regarding the U.K. government's pending decision about how to deal with the Edinburgh-based bank.
One market source said the name was a "spot of red" in a "sea of green." He opined that the preferreds would continue to be volatile and possibly "more heavily traded" leading up to the government's decision, which is expected in a matter of weeks.
The 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) were the most actively traded issue under the RBS umbrella during Tuesday trading, falling 27 cents, or 1.28%, to $20.84.
Several other issues were off by 27 cents on the day, including the 6.35% series N noncumulative dollar preference shares (NYSE: RBSPN), which closed at $20.22. On a percentage basis, that issue was off 1.33%.
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