Foreign banks boosted as central banks take action; investors focus on Qwest's new preferreds

By Stephanie N. Rotondo

Portland, Ore., Sept. 15 - Preferred stocks ended Thursday's session mostly in the green as U.S. and European leaders agreed to flood the money markets with dollars in an effort to prop up the global economy.

As such, foreign banks like ING Groep NV, Barclays plc and Royal Bank of Scotland Group plc got a boost.

But the real focus of the day was the recent new issues, Qwest Corp.'s new deal in particular. The new issue was generating a lot of interest - according to one market source, over 2 million of the $25-par notes turned over. But another trader said the interest in Qwest meant that other recent deals were "paling in comparison," especially the deal brought by Associated Banc-Corp on Sept. 7.

Also in new issues, Digital Realty Trust Inc.'s 7% series E cumulative redeemable preferreds officially listed on the New York Stock Exchange.

Away from the primary space, Countrywide Financial Corp.'s two series of listed preferreds were seen moving higher. One of the issues was even touted as the day's biggest percentage gainer. One trader said that the issues were "closing the gap" with the rest of the Bank of America Corp. complex.

Foreign banks get reprieve

Central banks from the United States and Europe, fearing what a European collapse could do to the global markets, have agreed to put more dollars into money markets via three auctions.

Banks can bid for unlimited funds at fixed interest rates. The first auction is slated for Oct. 12.

News of the coordinated effort helped give foreign bank preferreds a boost, traders reported.

Barclays' 7.1% series 3 non-cumulative callable dollar preference shares (NYSE: BCSPA) rose 65 cents, or 3.07%, to $21.84, while the 8.125% series 5 non-cumulative callable dollar preference shares (NYSE: BCSPD) moved up 71 cents, or 3.04%, to $24.09.

Despite the decent gains, a trader noted that Barclays was overall "flat on the week."

Meanwhile, ING Groep's 8.5% perpetual hybrid capital securities (NYSE: IGK) experienced "solid upward movement," according to a market source. The securities improved by 51 cents, or 2.23%, to end at $23.40.

At another shop, a trader said Royal Bank of Scotland paper was better, what with the "relief out of Europe."

The 5.9% noncumulative guaranteed trust preferreds (NYSE: RBSPE) closed 42 cents, or 4.87%, higher at $9.04. The 6.6% noncumulative series 5 dollar preference shares (NYSE: RBSPS) inched up 44 cents, or 3.79%, to $12.05.

HSBC Holdings plc's 8% exchangeable perpetual subordinated capital securities (NYSE: HCSPB) were one of the more active issues of the day, ending up by 16 cents, or 0.62%, at $25.98.

"There was a slightly better tone in Europe," a market source said. "But it's still a shaky situation."

Qwest a major focus

Qwest's issue of 7.5% $25-par senior notes due 2051 continued to intrigue investors.

The deal priced Wednesday and was increased to $500 million from $250 million. After pricing, traders remarked they were surprised the coupon did not come in and that the amount was not upped even more.

"I was looking for them to pinch the price a little bit," said a trader on Thursday. Still, he said that the paper was "doing well" at $24.88 bid, $24.90 offered around midday.

Another market source said 2.7 million of the notes traded - another trader noted that the deal will free to trade on Friday - and that most of the trades were "at or below par." He saw the notes at $24.89 at the close.

"The deal did well again today," said another trader, quoting it at $24.95 bid, $24.98 offered, "right where it should be."

However, because the deal from the Monroe, La.-based telecommunications provider was performing so well, "every other deal is paling in comparison."

For example, he said Associated Banc-Corp's 8% series B perpetual preferred stock - a $65 million issue that priced Sept. 7 - was "not doing well," given it is an unrated security and that it has such a high coupon. He said he was seeing lots of offers for the paper but no bids.

Another trader, who noted that he has not been involved with the security, said he "felt like there are fatter fish to fry."

He thought the preferreds were trading in an "upper $24 range."

Digital Realty lists

Digital Realty Trust's $250 million issue of 7% series E cumulative redeemable preferreds officially listed on the NYSE, according to traders.

The deal priced on Sept. 8. The ticker symbol is "DLRPE."

A trader said the issue was "hanging in there" at $24.82 around midday.

At the close, one market source placed the issue at $24.89. Another trader also saw the preferreds closing there but added that the preferreds gyrated throughout the day, falling as low as $24.81.

Among other new issues, Pebblebrook Hotel Trust's $75 million issue of 8% series B cumulative redeemable preferreds - the deal came Wednesday - was trading around par at the close, according to a market source.

He said the preferreds had been "down earlier in the day."

Another trader pegged the issue at $24.87.

Countrywide closes in

Countrywide Financial's two series of preferreds, the 6.75% trust preferreds (NYSE: CFCPA) and the 7% capital securities (NYSE: CFCPB), were "moving up pretty smartly," a trader said.

"They are closing the gap between the other Bank of America issues," he said.

The trust preferreds closed up 85 cents, or 4.3%, at $20.60, while the 7% preferreds gained $1.21, or 6.07%, to close at $21.14.

In fact, the 7% preferreds were the day's biggest percentage gainer.

By comparison, Bank of America's 8.2% series H depositary shares (NYSE: BACPH) - typically the most active of the Bank of America issues - moved up 60 cents, or 2.58%, to $23.87.

Bank of America is based in Charlotte, N.C. Countrywide is based in Calabasas, Calif.

Wells Fargo, MetLife active

A market source said Wells Fargo & Co.'s 8% noncumulative perpetual series J preferreds (NYSE: WFCPJ) were among the day's most active securities, with over 720,000 preferreds turning over. They rose 3 cents, or 0.11%, to $27.65.

There was no fresh news out on the San Francisco-based bank. The source said that "Wells Fargo has been active ever since they announced those extraordinary calls," referring to the bank's redemption of four series of preferreds, announced on Sept. 6.

Also busy were MetLife Inc.'s 6.5% series B noncumulative preferreds (NYSE: METPB), with over 562,500 changing hands. The preferreds dropped 7 cents, or 0.28%, to $25.05.

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