Trader sees 'better buyers' for RBS paper; Bank of America, Citigroup trade active but mixed

By Stephanie N. Rotondo

Portland, Ore., Sept. 23 - The preferred stock market got a bit of a rebound on Friday, though foreign issuers remained weak for the most part.

"I think it will trade like this for the next four to six weeks," a trader said. In order for the market to stabilize, the mortgage lawsuit affecting most domestic big banks needs to get some clarity, he said, and people need to get more comfortable with Europe.

"Until then, it's going to rock back and forth," he said.

Another trader remarked that there were "better buyers" in the preferred space and particularly in Royal Bank of Scotland Group plc paper.

Still, he noted that it was "high-grade stuff [that was] doing better than anything else."

A third market source said it was "definitely a volatile day," with the market initially opening lower and then rallying back to close just slightly better than Thursday.

"Liquidity was OK overall," he said.

The issues, however, remained the same.

"There is no clarity whatsoever," he said. He also noted that the IMF/G20 meeting was happening over the weekend and wondered what might come from that - and what it might do to markets come Monday.

Of the day's most actively traded issues, it was the usual suspects: Bank of America Corp., which closed higher, and Citigroup Inc., which fell a tad.

Better buyers for RBS

There were reportedly better buyers of RBS paper, but the preferreds were mostly down nonetheless.

The 5.75% series L noncumulative dollar preference shares (NYSE: RBSPL) fell 28 cents, or 1.77%, to $15.52. The 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) also declined, losing 7 cents to end at $11.43.

The 5.9% noncumulative trust preferreds (NYSE: RBSPE), however, gained a nickel to close at $8.61.

BofA gains, Citi slips

Bank of America and Bank of America-related issues made up the bulk of the day's most actively traded securities.

The 8.2% series H depositary shares (NYSE: BACPH) were busy, rising 29 cents, or 1.32%, to $22.28. Merrill Lynch's 8.625% series 8 noncumulative preferreds (NYSE: BMLPQ) were also active, up 21 cents to finish at $22.35.

Countrywide Financial Corp.'s 7% capital securities (NYSE: CFCPB) traded up 51 cents, or 2.64%, to $19.81.

Also active were Citigroup's 7.875% fixed-to-floating trust preferreds (NYSE: CPN). But while the Bank of America issues were up, Citi's were down, and the Ns lost 2 cents to close at $26.00.

Ally Financial Inc.'s 8.5% series A preferreds (NYSE: ALLYPA) dominated trading overall, with about 2.35 million preferreds turning over. The preferreds lost a penny to close at $19.24.

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