Preferreds trend higher on Europe hopes; banks move up; Goldman Sachs bonds free to trade

By Stephanie N. Rotondo

Portland, Ore., Oct. 21 - The preferred stock market "closed pretty close to its highs," a market source reported on Friday.

He said the overall market gains were based on the hopes that Europe will agree on a plan to help Greece avoid a default, although officials have already warned that the latest rescue package will fall short.

"Hope springs eternal in Europe," he said wryly. "I don't know where they are expecting the money to come from."

Regardless, banks like HSBC Holdings plc and Ally Financial Inc. were trading higher on "pretty decent" volume.

Meanwhile, Goldman Sachs Group, Inc.'s recently priced new issue freed to trade mid-afternoon. It did not appear to be performing as well as hoped.

Europe hopes boost banks

Investors believed Europe was on its way to finding a solution to help Greece as well as other euro zone nations, and they pushed bank preferreds into higher territory.

HSBC Holdings' 6.2% series A noncumulative preference shares (NYSE: HBCPA) gained 18 cents to $24.32, while the 6.36% noncumulative preferreds (NYSE: HSBCPB) earned a quarter, or 1.16%, to end at $21.75.

Ally Financial was deemed a "big mover," as the 8.5% series A preferreds (NYSE: ALLYPA) rose 30 cents, or 1.55%, to $19.60.

The 8.125% series B preferreds (NYSE: ALLYPB) jumped 60 cents, or 3.27%, to $18.95.

Earlier in the day, a trader said that Bank of America Corp. issues were also gaining big. By the end of business, however, the preferreds had given back all the gains, ending in the red.

The 8.2% series H depositary shares (NYSE: BACPH) closed down 26 cents, or 1.12%, at $23.05.

Goldman notes free up

Goldman Sachs priced a $500 million issue of 6.5% $25-par senior notes due 2061 on Wednesday, and the baby bonds freed to trade on Friday.

At midday, the paper was seen at $24.70.

After the bell, a market source said he saw markets of $24.72 bid, $24.77, although he noted that there were par trades.

The volume-weighted average price, he said, was $24.76.

"You still had syndicate activity going on," he said.

Goldman Sachs intends to list the bonds on the New York Stock Exchange under the ticker symbol "GSJ."

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