Market weak; Goodrich's 9.75% preferreds free up; Integrys under pressure; RBS ends mixed

By Stephanie N. Rotondo

Phoenix, Aug. 15 - Concerns about the Federal Reserve's plan to taper its stimulus program continued to push the preferred stock market down on Thursday.

"Everything is getting crushed," a trader said.

Another market source said that the Wells Fargo Hybrid and Preferred Securities index was off 79 basis points for the day. He noted that while that was off quite a bit, it was still better than the decline in the Treasury market.

The source said Treasuries had begun to dip even before the market opened on the back of disappointing economic data.

"Volume was better than it was in previous days," he added. "Prices are so much lower; I think people are doing some bargain hunting."

In the primary, Goodrich Petroleum Corp.'s $120 million of 9.75% series D cumulative preferreds freed to trade early in the session.

The issue came on Wednesday.

A trader said the paper was offered at $24.60 at midday. At the close, a source placed the issue around $24.70.

Integrys Energy Group Inc.'s $400 million of 6% fixed-to-floating rate junior subordinated notes due 2073 were meantime seen falling all the way to $24.00 early in the day. A trader said the issue was bid at $24.25 early on in the session, but once that got hit, it dipped.

"It was obviously a very poorly underwritten deal," another source said, seeing the issue closing at $23.98, with a volume weighted average price of $24.275. A majority of the trades occurred around $24.50, he said, but quite a few also traded at $23.95.

Meanwhile, the secondary arena saw a fair bit of activity in Royal Bank of Scotland Group plc preferreds. The foreign bank's shares were mixed, however, following a report from late Wednesday in which Fitch Ratings said a break-up of the firm could cost taxpayers more than if it stayed in one piece.

Fitch: RBS split not good

Royal Bank of Scotland was mixed Thursday following a report from Fitch out late Wednesday in which the rating agency said splitting up the Edinburgh, Scotland-based bank might not be the best way to go.

The 6.4% series M noncumulative dollar preference shares (NYSE: RBSPM) moved up just over 3 cents to $20.37, while the 6.35% series N noncumulative dollar preference shares (NYSE: RBSPN) gained 9 cents, closing at $20.39.

The 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) were also up, rising 9 cents to $23.47.

However, the 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) dropped 6 cents to $20.76.

In its analysis, Fitch said that splitting RBS into a "good" and "bad" bank - which is the current plan for the bank that is majority owned by the U.K. government - could cost more than it would benefit taxpayers and the economy. Additionally, any losses seen at the "bad" bank could then be turned over to the government's balance sheet.

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