Public Storage, PNC deals doing well; MetLife preferreds gain; National Bank of Greece falls

By Stephanie N. Rotondo

Portland, Ore., July 25 - The preferred stock market, like the rest of the financial markets, was shaky as U.S. lawmakers continued to debate debt-ceiling deals.

"It's a quiet one out there," a market source said. "The debt thing is certainly a problem. But a lot of people are out as well."

Trading was "mostly red, but not really down a lot," the source said. He added that the market was down about 45 basis points, or 10 cents to 11 cents on average.

"That's not great, certainly," he said, noting that there was "very light volume."

In the new issue realm, Public Storage's recent 6.35% series R preferreds continued to trade around par - "stalling," one trader called it - and PNC Financial Services Group Inc.'s new 6.75% fixed-to-floating-rate perpetual preferreds were performing "better than anticipated," a source said.

Elsewhere, MetLife Inc.'s series B preferreds traded higher, bucking the overall market trend. A source said there was no new news out on the insurance company and opined that the gain was a "delayed response" to news out last week.

Though trading was not overly heavy in National Bank of Greece SA's 9% series A preferreds, they did fall after Moody's Investors Service downgraded Greece's sovereign debt yet again.

New issues perform well

A trader said Public Storage's recent $425 million issue of 6.35% series R cumulative preferreds was "stalling out" around par.

Another source said the paper traded in a range between $24.90 and $25.00.

Among other recent deals, PNC's $1 billion issue of 6.75% fixed-to-floating-rate perpetual preferreds was doing "better than anticipated," a market source said.

He said the preferreds were trading between 99.75 and 99.875.

Glendale, Calif.-based real estate investment trust Public Storage priced its deal July 19. Pittsburgh-based PNC brought its deal Thursday. Both deals were greeted with enthusiasm as the new issue market has all but dried up of late.

Neither issue has officially listed on an exchange.

MetLife's 'delayed response'

MetLife's series B preferreds were seen going against the downward grain in Monday trading.

The preferreds (NYSE: METPB) gained 2 cents, closing at $25.17. The issue was the day's second most active security. About 456,000 of the preferreds changed hands.

A market source said there was no fresh news out about the company and speculated that the increase was due to news out last week.

"I'm pretty sure it was just a lag from the news last week," he said, referring to the company's announcement that it was considering divesting itself of its bank holding unit.

On Thursday, the New York-based insurance company said it was exploring the sale of its MetLife Bank NA unit.

"Given MetLife's focus as a global insurance and employee benefits leader, the company has decided that a bank holding company structure is no longer appropriate," the company said in a statement.

"MetLife Bank represented just 2% of MetLife Inc.'s first-quarter 2011 operating earnings, and we do not believe it is appropriate for the overwhelming majority of our business to be governed by regulations written for banking institutions," Steven A. Kandarian, president and chief executive officer, said in the statement. "In a highly competitive global insurance marketplace, it is imperative that MetLife be able to operate on a level playing field with other insurance companies."

The company is scheduled to release its second-quarter earnings on Friday. Analysts are expecting earnings per share of $1.11 on revenues of $16.12 billion.

In the second quarter of last year, MetLife reported income of $1.23 per share on revenues of $12.83 billion.

Greek bank loses ground

National Bank of Greece's 9% series A preferreds (NYSE: NBGPA) fell 72 cents, or 8.18%, to $8.08.

Volume, however, was thin at nearly 91,000 preferreds.

"On a percentage basis, it was down a lot," a market source said.

The decline came as Moody's cut the country's sovereign debt rating three notches to Caa1 from Ca. The agency said the downgrade was due to the belief that even with a new bailout plan approved by the European Union and International Monetary Fund, the country would likely still default.

Moody's also warned that the deal set a bad precedent for other struggling European countries.

Part of the deal with Greece calls for a distressed debt exchange, which is typically viewed as a default.

"Despite statements to the contrary, the support package sets a precedent for future restructurings should the finances of another euro area sovereign become as problematic as those of Greece," the agency said.

At the same time, Moody's praised Greece's bailout package, claiming that it will likely stem contagion risk in the euro area and help Greece stabilize.

Most active: Ally, Citi

Among the day's most actively traded issues were Ally Financial Inc.'s 8.5% series A preferreds. They (NYSE: ALLYPA) dropped 12 cents to $15.90 on volume of about 471,600 preferreds.

Bank of America Corp.'s series H preferreds (NYSE: BACPH) lost 21 cents to end at $25.17 on volume of about 358,000 preferreds.

Allianz SE's unlisted preferreds declined by 46 cents to $26.00, according to a market source. He said volume was about 260,000 preferreds.

"I don't know what's driving that," he said of the losses. "Unless it's just the whole Greek thing, which it certainly could be."

Citigroup Inc.'s series J preferreds (NYSE: CPJ) also made the list, falling 15 cents to $25.72. Volume was about 246,400 preferreds.

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