Bank of America issues pop on CEO comments; ING preferreds lose ground; Aviva issue gains

By Stephanie N. Rotondo

Portland, Ore., Dec. 6 - The preferred stock market was better to mixed on Tuesday, according to market sources.

One trader noted that "good news out of Europe" was pushing things higher. That "good news" was reports that the region could create a second bailout fund to help stem its debt crisis.

Word that the Basel Committee on Banking Supervision might reduce its capital requirements and allow banks to use equities and corporate debt to meet new short-term liquidity requirements also might have played a role, a trader said.

Bank of America Corp. was moving up - and in some cases, moving up considerably - after the company's top executive, Brian Moynihan, spoke at a Goldman Sachs conference. In his speech, Moynihan reiterated that the company's focus is cost cutting and "addressed more publicly" some of the ways it is doing just that, a source said.

In foreign financials, ING Groep NV was sliding downward, though there was no news out to explain why. One market source opined that the losses were tied to the performance of Amsterdam's stock market, which was not good.

Among recent deals, Aviva plc "bounced quite a bit," one shocked source said. The deal has not performed all that well since hitting the market in early November, despite the belief held by some that the paper is a good deal.

BofA boosted by CEO comments

Bank of America's preferreds were heading into higher territory Tuesday after the Charlotte, N.C.-based bank's chief executive spoke at a Goldman Sachs conference.

One market source noted that most of the issues were up anywhere from 2% to 4% on the day. For example, the 8.625% series 8 noncumulative preferreds (NYSE: BMLPQ) traded up 54 cents, or 2.39%, to $23.09.

"That's up a lot on a percentage basis," he said.

The Merrill Lynch issues were by far the better performers of the structure. The floating-rate series 4 noncumulative preferreds (NYSE: BMLPJ) rose 92 cents, or 5.36%, to $18.02, while the floating-rate series 5 noncumulative preferreds (NYSE: BMLPL) improved by 94 cents, or 5.5%, to $18.04.

Also, the floating-rate series E noncumulative preferreds (NYSE: BACPE) popped 69 cents, or 3.89%, to $18.44.

In his speech to investors attending the conference, Moynihan noted that the bank's balance sheet has improved significantly since the second half of 2008.

"We continue to position ourselves and make sure we are in good shape to last through anything we see ahead," Moynihan said at the Goldman Sachs U.S. Financial Services Conference in New York.

The company has been focused on cutting its costs recently and has done so via layoffs, asset sales and the exchanging of some preferred issues.

Bank of America hopes to cut $5 billion over the next few years.

Additionally, Moynihan stressed that the bank's capital position - and its tier 1 capital in particular - has also improved.

Also on Tuesday, the bank said it had agreed to settle a class action mortgage lawsuit for $315 million. However, the U.S. District judge overseeing the case, Jed Rakoff, needs to approve the settlement. This could prove tricky because the settlement requires no admission of guilt. Rakoff recently overturned a settlement agreement between Citigroup Inc. and the Securities and Exchange Commission because it held a similar provision.

ING weakens

ING Groep's preferred securities were losing ground during Tuesday's session.

"All of their issues were down," a market source said, adding that he hadn't seen any news that would have accounted for the losses. However, he did note that Amsterdam's stock market performed poorly for the day, "and that is their main market."

The 7.375% perpetual hybrid capital securities (NYSE: IDG) lost 23 cents, or 1.18%, to close at $19.28. The 6.375% perpetual hybrid capital securities (NYSE: ISF) meantime fell 6 cents to $16.92.

ING is a financial services company based in Amsterdam.

Aviva catches a break

Aviva's $400 million issue of 8.25% capital securities due 2041 "finally popped," a trader said.

"That's very good," he said.

The issue (NYSE: AVV) had been sitting around the $24.15 level but moved up 33 cents, or 1.37%, to $24.50 on Tuesday.

"Either it's just a big seller out there that got out of the way or it just went up naturally," a trader said.

The deal priced at par on Nov. 17 but quickly traded downward. While some market watchers blamed the performance on poor underwriting, others opined that the paper would eventually gain traction, especially once it started to pay out dividends.

Aviva is a London-based insurer.

PS Business down, Lehman up

A market source said PS Business Parks Inc.'s 7.375% series O cumulative preferreds (NYSE: PSBPO) fell in relatively active trading on Tuesday, though there was no news out to explain the move.

"Most likely it's one investor lightening their position," he said.

The preferreds fell 7 cents to $25.38.

Meanwhile, Lehman Brothers Holdings Inc.'s 7.95% series J noncumulative preferreds (OTCBB: LEHJQ) were trading busily after the company's plan of reorganization was finally approved.

The issue traded up fractionally, ending at 1.2 cents.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.