Goldman woes pressure preferreds, common stock; U.S. Cellular active; M&T Bank deal quiet

By Stephanie N. Rotondo

Portland, Ore., May 12 - Goldman Sachs Group, Inc. was the day's "biggest loser," a preferred stock market source said Thursday.

The bank's preferreds lost as much as 39 cents following a scathing report put out by Rochdale Securities LLC analyst Richard X. Bove. The report pointed to the growing possibility that Goldman Sachs might face criminal charges from the Department of Justice for its role in the financial crisis.

Among recent new issues, United States Cellular Corp.'s new deal continued to do well. A source noted that the issue was one of the day's most actively traded securities, with over 1 million bonds changing hands.

The new issue market was surprisingly quiet, however, when it came to M&T Bank Corp.'s new $500 million issue of perpetual preferreds. That deal priced late Wednesday, but some in the market were having a hard time tracking it down.

Also, Gulf Power Co., a Southern Company, released a deal Thursday.

Goldman pressured by Bove

Goldman Sachs' preferreds traded "very busy today," a market source said. The source added that they were also "among the biggest losers."

The series F preferreds fell 4 cents to $24.67, the series D preferreds fell 32 cents to $22.68, and the series A preferreds declined 39 cents to $22.78.

The declines came after the Rochdale Securities analyst said that there was growing pressure on the Justice Department to bring charges against the investment bank for misleading clients in regards to its mortgage-related investments.

"It now appears that the pressure on the Justice Department to bring a criminal lawsuit against Goldman is building to a high pitch," Bove wrote in his report.

Goldman Sachs was one of three banks that a Senate investigative panel cited in a 650-page report on the financial crisis. The report indicated that the three banks intentionally misled investors and the government about their mortgage-related investments and how those investments played a role in the economic crisis.

Bove issued a "sell" rating on Goldman Sachs' stock, which fell 3.47%, or $5.13, to $142.75 (NYSE: GS).

U.S. Cellular at par

U.S. Cellular's new 6.95% $25-par senior notes due 20260 saw "a lot of volume," a market source said.

He estimated that more than 1.3 million notes traded in the gray market. He said the issue was flat, trading around par.

Another trader quoted the notes at $25.00 bid, $25.05 offered.

Hersha Hospitality Trust's new 8% series B perpetual cumulative redeemable preferreds meantime remained largely inactive. A trader pegged the paper at $24.85 bid, with no offers.

M&T deal 'substantial'

M&T Bank priced a $500 million issue of depositary shares late Wednesday.

Each share represents a one-tenth ownership interest in a new series of preferred stock, 6.875% series D perpetual non-cumulative preferreds.

The Buffalo-based bank said late last month that it was planning an offering of perpetual preferreds before the end of the second quarter.

"It was done very quickly, quicker than the market thought," a trader said, calling the deal "pretty substantial."

Another market source said he had not seen any gray-market quotes for the preferreds.

"I think it was done via a private placement. We can't seem to find who owns it, which is a little unusual," the source added.

M&T did not specify which banks were covering the deal, but sources reported that Keefe, Bruyette & Woods Inc. and J.P. Morgan Securities LLC were the bookrunners.

Gulf Power prices 'baby bonds'

Gulf Power announced and quickly priced a $125 million offering of 5.75% series 2011A senior notes on Thursday.

The deal was originally slated to come at $100 million.

One trader quoted the $25-par bonds at $24.85 bid, $24.90 in the gray market. Another saw them at $24.80 bid, $24.90 offered.

Gulf Power is based in Pensacola, Fla.

BRE gains on redemption

BRE Properties Inc. issued a notice of redemption to holders of its 6.75% series C cumulative redeemable preferred stock on Friday.

The redemption price is $25.34688, which equals par plus dividends through June 13.

One the news, the series C preferreds traded up 3 cents, according to a market source, though trading was thin.

He pegged the shares at $25.29, with just 5,000 to 6,000 shares changing hands.

"It's not a big deal," the source said.

BRE is a San Francisco-based real estate investment trust.

Ally, BofA active, better

Ally Financial Inc. saw about 880,000 of its series A 8.125% preferreds trade, gaining 6 cents to close at $26.19. They were the day's most actively traded $25-par preferreds.

The second most active issue was Bank of America Corp.'s series Q preferreds. Those also traded up - 12 cents - to end at $26.39. About 623,000 preferreds changed hands.

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