SCE trust preferreds trade in gray; JPMorgan preferreds not immediately affected by headlines

By Andrea Heisinger

New York, May 11 - There were no new deals to close out a lackluster week in the preferred stock market.

The $475 million of 5.625% series F trust preference securities that Southern California Edison Co. unit SCE Trust I priced after the close on Thursday were not freed for trading on Friday and won't be until Monday, a trader said.

He did see the $25-par securities trading in the gray market at $24.80 in early afternoon. They were quoted by another trader at $24.88 around noon ET.

Otherwise, the secondary market and market as a whole was "very slow," he said.

News that JPMorgan Chase & Co. took a $2 billion trading loss didn't affect its preferred stock, the trader said early in the afternoon.

Banks were the topic of the day as credit rating downgrades seem to be on the horizon for some names.

"People are just waiting to see about Moody's bank downgrades - could be something like 100 affected," a source said.

Just before the market close, a trader said news hit that JPMorgan had been downgraded by Fitch Ratings. The agency downgraded the company's long-term issuer default rating to A+ from AA- and its preferred stock to BBB- from BBB on the trading loss news. The ratings are on Rating Watch negative.

Overall, the market was seen down 17 basis points, or a little less than 5 cents on the day.

"It closed way down," a trader said. "Initially it was down on the JPM news, then it recovered late in the morning and then we saw another decline late in the day."

The late-day plunge has been typical of Friday afternoons, the trader said.

Most actives switch up

The most actively traded preferreds for much of the week have been those of Royal Bank of Scotland Group plc or Ally Financial Inc., but that changed on Friday, a source said.

The market traded 6.75 million of PNC Financial Services Group, Inc.'s 6.125% series P noncumulative shares (NYSE: PNCPP), and they ended down 12 cents at $25.05.

RBS' series M preferreds saw 1.47 million shares change hands, ending up 6 cents at $17.70.

Next in the most actives was a series D preferred (NYSE: CWHPD) from CommonWealth Real Estate Investment Trust. There were 1.63 million shares traded, and they ended at $21.38, or up 8 cents.

Ally Financial saw its series A and series B preferred shares also actively trading on investors "responding [to] and figuring out" news about Residential Capital LLC.

The U.S. Department of the Treasury confirmed earlier in the week that it gave Ally the OK to put the troubled Residential Capital unit into bankruptcy, should that be the path taken.

There were 838,000 shares traded of the 8.5% fixed-to-floating-rate series A perpetual preferreds (NYSE: ALLYPB), which ended down 19 cents at $23.80, and 741,000 shares of the series B 8.125% trust preferreds (NYSE: ALLYPA) were traded. They ended down 21 cents at $22.87.

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