Preferreds stay strong; First Republic new issue hangs at par; RBS' retreat continues

By Stephanie N. Rotondo

Phoenix, Oct. 23 - Preferred stocks continued to firm up in midweek trading, but a trader said there remained some hesitation in the market.

"Everybody just seems to be sitting on their hands," he said.

Still, he noted that the bond market was "doing well," with the 10-year Treasuries trading at levels not seen for about six months. He also pointed to chatter that the Federal Reserve could increase its quantitative easing program instead of tapering it, given recent jobs figures.

"If that happens, we could see people rushing back in looking for yield," he said.

Another market source said that it was another "up day" for the market and that while volume was "probably not as good as [Tuesday]," it was still not too bad.

As of midday, the Wells Fargo Hybrid and Preferred Securities index was up 4 basis points. By the end of business, the index was up 28 bps.

In recent deals, First Republic Bank's $200 million of 7% series E noncumulative perpetual preferreds were holding in at $25.05 bid, $25.10 offered, a trader said at midday. After the bell, a source said the issue was the day's most actively traded security, with over 1.4 million shares changing hands.

The source said the preferreds ended at par, though he said that the volume weighted average price was $25.05.

The deal came Monday.

In the secondary market, Royal Bank of Scotland Group plc's preferreds remained under pressure. The securities have been falling off dramatically all week due to a news article late last week regarding the U.K. government's pending decision about how to deal with the bank's bad assets.

During Wednesday's session, the 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) were the most active of the RBS issues, falling 24 cents, or 1.12%, to $21.10.

Among other active issues, JPMorgan Chase & Co.'s 5.5% series O noncumulative preferreds (NYSE: JPMPD) rose 3 cents to $21.75, while Wells Fargo & Co.'s 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) fell 6 cents to $24.61.

Morgan Stanley Co. Inc.'s 7.125% series E fixed-to-floating rate noncumulative perpetual preferreds (NYSE: MSPE) meantime held in at $25.95.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.