Bank of America opens higher despite pricing; Kinross maintains lofty perch; Synaptics hammered on outlook

By Evan Weinberger

New York, Jan. 25 - The doubling of Bank of America Corp.'s convertible preferred offering and the aggressive pricing were supposed to take the juice out of the deal. Instead, the convertibles traded higher.

If the juice remained in the deal, it might have traded up like Kinross Gold Corp.'s new convertibles, which held steady on their second day of trading.

National City Corp.'s new convertibles also moved up on their second day on the market.

E*Trade Financial Corp. traded higher on positive reviews of its restructuring plan.

And Synaptics Inc. fell on lowered guidance for the next quarter.

Other than Bank of America, which traders and analysts said was a hot item, the new deal front was quiet Friday.

Spurred by positive earnings from Microsoft Corp. and reports of a potential buyer for struggling bond insurer Ambac Financial Group Inc., stock markets rallied early Friday.

They couldn't hold the gains, however, and a sell-off began in the afternoon. Unemployment worries and continued credit concerns drove stocks down. A bout of afternoon cashing in also worked to lower the three major indices after two days of big gains.

The Dow Jones Industrial Average fell 171.44 points, or 1.38%, to close at 12,207.17.

The Nasdaq gave back 34.72 points, or 1.47%, for a 2,326.20 close.

The Standard & Poor's 500 closed at 1,330.61, a loss of 21.46 points, or 1.59%.

BofA moves up even without juice

When rumors spread that Charlotte, N.C.-based Bank of America was doubling its perpetual preferred stock offering and bringing it in with aggressive terms Thursday before pricing, market watchers warned that the juice was being squeezed from the deal.

Bank of America originally announced Wednesday that it was planning to raise $6 billion in a combination of straight and convertible perpetual preferred stock.

"Too big a deal, coming at the rich end, means investors will scale back," is how one analyst described the prevailing view.

When the deal finally went down Thursday evening, the total was doubled to $12 billion, with $6 billion coming in convertible preferreds. The deal came in at the rich end with a 7.25% dividend and 25% initial conversion premium, based on a multi-day VWAP. The conversion premium on BofA's closing stock price Thursday was 33.8%. Talk was set at a 7.25% to 7.75% dividend and a 20% to 25% initial conversion premium.

Did the pricing and size turn off investors? "It did, but it still traded pretty strongly," an analyst said.

A trader reported heavy volume in the convertible preferreds.

In the end, Bank of America's 7.25% non-cumulative perpetual convertible preferred stock, series L, closed the day at 1,036 versus a closing stock price of $39.48.

Bank of America stock (NYSE: BAC) slipped 42 cents, or 1.05%, on the day.

Kinross Gold retains juice

Toronto-based Kinross Gold maintained the juice Friday, the second day of trading for its 4% senior unsecured convertible notes due March 15, 2028.

After moving up steadily on the first day of trading, the gold miner's convertibles continued to rise Friday. They closed the day at 109.47 versus a closing stock price of $22.18 after finishing Thursday at 109 versus a stock price of $22.52.

An analyst saw the convertibles as high as 111.625 versus a stock price of $25.50 during the course of the day.

Kinross Gold stock (NYSE: KGC) slid 34 cents, or 1.51%, on the day.

National City gains

Cleveland-based financial holding company National City's new 4% convertible senior notes due Feb. 1, 2011 inched higher Friday on their second day on the market.

The convertibles closed the day at 102.42 versus a closing stock price of $16.36. They closed Thursday at 101.5 versus a stock price of $16.49.

National City stock (NYSE: NCC) dropped 13 cents, or 0.79%, on the day.

E*Trade up on restructuring

Struggling New York-based online broker E*Trade announced a $1.71 billion fourth-quarter loss Thursday after the market close. That translates to $3.98 per share for the last three months of 2007.

In the same period of 2006, E*Trade had a $176.7 million, or 40 cents per share, profit.

Most of the 2007 fourth-quarter losses came from the November sale of E*Trade's portfolio of mortgage-backed securities, which the company got rid of at a steep discount.

In its earnings announcement, E*Trade said that its restructuring plan was moving ahead as scheduled, and the brokerage expected to see results soon.

That's just what investors were waiting to hear.

E*Trade's 6.125% common equity units due Nov. 18 closed Friday at 6.2 versus a closing stock price of $3.76. They closed Thursday at 5.71 versus a stock price of $3.48.

E*Trade stock (Nasdaq: ETFC) jumped 28 cents, or 8.05%, on the day.

Synaptics down on guidance

There was good news and there was bad news when Santa Clara, Calif.-base computer touch-screen interface maker Synaptics announced its earnings Thursday after the close.

On the good news side, Synaptics announced a net income of $14.2 million, or 50 cents per share, for fiscal 2008's second quarter. That's a rise from the $9.3 million, or 32 cents per share, profit for the same period the previous year.

The bad news was that Synaptics lowered its guidance for the coming quarter as it said an economic slowdown would hurt sales of consumer electronics.

Investors only heard the bad news.

Synaptics' 0.5% convertible senior subordinated notes due Dec. 1, 2024 closed Friday at 94.5 versus a closing stock price of $24.07. They closed Thursday at 100.14 versus a stock price of $31.43.

Synaptics stock (Nasdaq: SYNA) was throttled, losing $7.36, or 23.42%, on the day.

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