Market begins holiday exodus; Stifel's new issue frees up, trades above par; SunTrust off

By Stephanie N. Rotondo

Phoenix, Dec. 19 - The preferred stock market was winding down as the holidays drew nearer on Wednesday.

"I think people are already starting to leave for the holidays," a trader said, lamenting a lack of volume.

Despite the lack of volume - except in certain issues - the market was trending modestly higher.

Stifel Financial Corp.'s new $150 million offering of 5.375% $25-par senior notes due 2022 were freed to trade after pricing Tuesday. At midday, the paper was holding at the previous day's levels, but pushed higher by the close.

But it was Royal Bank of Scotland Group plc that was dominating the day. One market source attributed the heavy volume in the name to "year-end shifting," but news regarding UBS AG's Libor scandal settlement might have also factored in. RBS is in negotiations with regulators about its role in the scandal.

Stifel frees, hits par

Stifel Financial's new 5.375% $25-par notes due 2022 were holding in at $24.90 bid, $24.92 offered, the trader said at midday.

By the close, a market source said the issue technically closed at $25.37, though he thought that seemed high. A better indicator, he said, was the volume weighted average price, which was around par.

The deal priced Tuesday shortly before the market closed and freed from the syndicate on Wednesday.

SunTrust slips

SunTrust Banks Inc.'s $450 million of 5.875% series E noncumulative perpetual preferreds - a deal that priced last week - were coming in a bit, trading around $24.72.

In other recent deals, CoreSite Realty Corp.'s $100 million of 7.25% series A cumulative redeemable preferreds listed on the New York Stock Exchange on Wednesday.

The issue priced Dec. 5.

The symbol is "CORPA."

"I don't think they're doing much," a trader said.

The shares were trading at $25.09, up 11 cents. Overall trading activity, however, was modest.

RBS active, higher

Wednesday's session saw RBS preferreds dominating the scene, which a source attributed to "year-end shifting."

The securities were also much firmer on the day. The 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) rose 7 cents to $23.92, while the 6.4% series M dollar preference shares (NYSE: RBSPM) gained 2 cents to close at $22.47.

The 6.08% noncumulative guaranteed trust preferred securities (NYSE: RBSPG) meantime put on 29 cents, or 1.44%, ending at $20.40. The 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) earned 20 cents, closing at $22.89.

While year-end portfolio jockeying might have accounted for some of the activity in the name, there was also news out that could have played a role.

UBS was fined $1.5 billion on Wednesday for its role in a Libor rigging scandal that saddled Barclays plc with a $472 million penalty back in June. RBS is in talks with regulators to come to a settlement agreement for the part it played in the debacle.

Chatter is that the Edinburgh-based bank could face a charge of up to $535 million.

Also on Wednesday, RBS announced that it was shuttering its global strategic equity solutions group, as it attempts to pare down and focus on its core businesses.

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