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Preferreds begin week ‘basically flat’; new deal could be on the horizon; RBS busy, gains
By Stephanie N. Rotondo
Phoenix, July 28 – Preferred stocks were “basically flat” on Monday after some minor volatility to the upside, a trader said.
The Wells Fargo Hybrid and Preferred Securities index ended up 1 basis points at mid-morning.
A trader said he was “hearing a possible deal this week,” though he did not have a specific name. He also suggested that the rumor “could just be hearsay,” especially given the pipeline’s recently stemmed flow.
In secondary trading, liquidity overall was on the muted side as the first trading session of the week kicked off.
Royal Bank of Scotland Group plc’s preferreds continued to be on the active side and better following the company’s release of preliminary quarterly results on Friday.
The 6.35% series N noncumulative dollar preference shares (NYSE: RBSPN) ended up a dime at $24.60. The 6.4% series M noncumulative dollar preference shares (NYSE: RBSPM) also closed at $24.60, up 16 cents on the day.
In a press release out Friday, RBS said its pre-tax profit rose 81%, due largely to a decline in loan impairments. However, the company warned that ongoing legal issues could weigh on results in the coming quarters.
The results are expected to show a pre-tax profit of £2.65 billion, which compares to £1.37 billion a year earlier. Operating profit is expected at £2.6 billion, versus £708 million the year before.
Impairment losses for the first half of the year dropped to £269 million, a £1.88 billion decline.
RBS will put out the full results on Aug. 1.
Meanwhile, Wells Fargo & Co.’s most recently priced issue – the 6% series T class A noncumulative preferreds (NYSE: WFCPT) – were actively trading but were moving toward the downside, bucking the trend of the broader market.
The paper finished the session down 3 cents at $24.82 on Monday.
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