Foreign issuers gain ahead of France-Germany meeting; Bank of America preferreds bounce back

By Stephanie N. Rotondo

Portland, Ore., Aug. 15 - As the common equity markets continued to recoup losses from last week, so did the preferred stock market move higher Monday.

"Everything seems to be moving up," one trader said. "Everything kind of shot up right out of the gate."

"It was an up day," noted another market source, who saw an average gain of 48 cents for $25-par paper.

Foreign issuers like Aegon NV and Royal Bank of Scotland Group plc "were all up," the first trader said. Investors continued to keep an eye on the eurozone ahead of a Tuesday meeting of French president Nicholas Sarkozy and German chancellor Angela Merkel. The European leaders are expected to hash out ways to fix the financial crisis growing across the continent.

Meanwhile, Bank of America Corp. issues were also climbing higher. One trader pointed to a report from Barron's in which the common stock was deemed attractive as a possible reason for the gains, though he also gave a nod to news regarding the sale of the bank's Canadian and European credit card units and a more competitive lending arena.

Other U.S.-based financials such as Ally Financial Inc. and Citigroup Inc. were also trading busily and better.

Aegon, RBS improve

Ahead of a meeting between the heads of France and Germany on Tuesday, foreign issuers like Aegon and Royal Bank of Scotland saw their preferreds gain ground.

Aegon's 7.25% perpetual capital securities (NYSE: AEF) moved up $1.28, or 5.6%, to $24.14. RBS' series E preferreds (NYSE: RBSPE) improved by 40 cents, or 3.62%, to $11.45, while the RBS T series preferreds (NYSE: RBSPT) rose 62 cents, or 4.13%, to $15.62.

According to a preferred trader, investors were keen to find out if France and Germany would agree to an issue of eurozone bonds, which would then aid in the repurchase of debt from struggling countries such as France and Italy.

The trader said that investors seemed to think it was "50/50" as to which way Sarkozy and Merkel would go.

But both officials have reportedly played down that possibility as a fix for the Euro-contagion spreading across the continent.

"All eyes will be on France tomorrow," the trader said.

BofA bounces back

Bank of America preferreds climbed higher on Monday after the company announced that it is selling its Canadian and European credit card units.

The 8.625% series 8 noncumulative depositary shares (NYSE: BMLPQ) advanced 49 cents, or 2.06%, to $24.29. The beleaguered Countrywide Capital 7% capital securities (NYSE: CFCPB) meantime gained 93 cents, or 4.56%, to end at $21.27.

"The Countrywide issues still seem to be the cheapest of their cumulative paper," a trader said.

The bank said Monday that it plans to sell its Canadian credit card business to TD Bank Group and that it also intends to leave the card business in the United Kingdom and Ireland.

Earlier this month, Bank of America had said that it was selling its credit card unit in Spain to Apollo Capital Management.

"It's a good sign that they are selling off non-core assets," a trader remarked, adding that "investors like seeing that."

Additionally, the trader noted that the Federal Reserve recently said there is increased competition between banks to lend money - another positive, as it lends to the belief that credit is loosening.

Ally, Citi gain

Among other active and gaining issues were Ally Financial's two series of preferreds.

The 8.5% series As (NYSE: ALLYPA) increased 62 cents, or 3%, to $21.30, with 1.19 million preferreds trading.

The 8.125% series Bs (NYSE: ALLYPB) gained only 20 cents, or 1.06%, to finish at $19.13. Volume was about 987,000 preferreds.

Citigroup's 8.5% series Js (NYSE: CPJ) closed 11 cents higher, or 0.44%, at $25.37. Turnover was about 706,000 preferreds.

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