Preferreds end week up slightly; Synovus wraps TARP redemption; Wells Fargo regains ground

By Stephanie N. Rotondo

Phoenix, July 26 - Preferred stocks were "pretty much flat" as of midday on Friday, a trader reported.

"The [Treasury] bonds were off yesterday," he noted, until one central banking official said that interest rates would likely hold at the current low levels for awhile. That led to a rally in Treasuries and resulted in the flat market come Friday.

"It seems like a lot of people are out," the trader added, as players take advantage of the final few weeks of summer. "In the last two years, August has been pretty volatile, so hopefully we'll see some movement."

As the week came to an official close, the market was seen up just a touch, following the trend of the common stock market.

As for the day's dealings, Synovus Financial Corp. announced that it had completed its planned redemption of $968 million of preferreds issued to the U.S. Treasury Department under the Troubled Asset Relief Program.

The redemption was partially funded with proceeds from a sale of $130 million of 7.875% series C fixed-to-floating rate noncumulative preferreds.

The deal priced Monday.

Despite the news - which a trader said was "good" - there weren't many markets for the recent issue, the trader said.

After the bell, a market source said the paper dropped 6 cents to $25.45.

Meanwhile, Wells Fargo & Co.'s $1.5 billion of 5.85% series Q class A fixed-to-floating rate noncumulative preferreds (NYSE: WFCPQ) were "coming back a little bit," trading at $24.85 as of midday.

Recent weakness in the market had pushed those securities under par earlier in the week.

At the close, the issue was at $24.78, up 2 cents day over day.

That deal came July 15 and listed on Tuesday.

Among foreign issuers, Royal Bank of Scotland Group plc saw its preferreds declining during the session.

The 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) dropped 11 cents to $22.89, while the 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) lost 32 cents, or 1.6%, closing at $19.66.

The Edinburgh, Scotland-based bank is expected to report earnings on Aug. 2.

Arch rises, earnings drop

Arch Capital Group Ltd.'s 6.75% series C noncumulative preferreds (NYSE: ARHPC) put on 20 cents during Friday trading, closing at $25.77.

Late Thursday, the company reported its second-quarter results, which showed a steep decline year over year.

For the quarter, Arch posted a profit of $171.5 million, or $1.26 per share. That compared to a profit of $202 million, or $1.46 per share, the year before.

However, the earnings were better than expected, as analysts polled by Thomson Reuters had forecast earnings of 83 cents per share.

Revenues dipped to $810.54 million, versus $820.23 million the previous year.

Analysts were expecting revenues of $883.15 million.

Arch Capital is a Hamilton, Bermuda-based reinsurance company.

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