Qwest greenshoe exercised, notes improve; National Bank of Greece falls again; Goodyear slips

By Stephanie N. Rotondo

Portland, Ore., June 7 - The preferred stock market continued to experience weakness in Tuesday trading, according to market sources.

"It was a mostly red day," one source said, calling the market down "about 22 basis points," or "about a nickel."

"All in all, there seems to be a common trend between preferred players to lighten up," said another trader.

New issue chatter was that a deal is coming as soon as Wednesday.

Qwest Corp.'s recent $25-par notes broke par, a trader said. The buzz is that the notes could officially list as early as Wednesday.

Meanwhile, National Bank of Greece SA was "not going gangbusters," as one markets source put it. The preferreds continued to lose ground as Moody's Investors Service said a rollover of sovereign debt could potentially be deemed a default.

In the autosphere, Goodyear Tire & Rubber Co. announced a dividend, but the news did not result in gains for the company's preferreds. Also, General Motors Corp. is said to be considering a stock repurchase, though the U.S. government is reported to not be too keen to sell.

GM's preferreds ended the day a big higher.

New issues expected

At least two new issues are expected to come this week, according to market sources.

As previously reported, one deal is expected to be small and the other large.

On Tuesday, a trader said he heard one deal will be from a REIT reinsurance company, though he did not give specifics. Another trader said he heard that particular deal would come Wednesday.

Qwest greenshoe exercised

A trader said Qwest's recent 7.375% $25-par notes due 2051 was "greenshoed" Tuesday and the notes traded up to close around $25.02.

"So it's broken par, and that's post the greenshoe," he said.

Another trader said he thought the notes might list on the New York Stock Exchange as early as Wednesday.

"That's good news," the first trader said. He added that the deal might "waffle" up on listing but said he expected it to trade at par or better.

Additionally, the trader opined that preferred players might now take another look at United States Cellular Corp.'s 6.95% $25-par notes.

That issue traded up a penny to $24.89 (NYSE: UZA).

"I still think that is a great pick," the trader said.

CommonWealth up, Endurance not

Among other new issues, a trader said there were "more buyers than sellers" of CommonWealth REIT's 7.25% series E cumulative redeemable preferred shares (NYSE: CWHPE).

"It's a good piece," he said, quoting the issue at $24.75 bid, $24.80 offered.

Endurance Specialty Holdings Ltd.'s recent 7.5% series B non-cumulative preferred shares, however, felt some "pressure," the trader said.

The preferreds fell 6 cents to $24.75 (NYSE: ENHPB).

"That's a very interesting buy, it comps out to outstanding," the trader said.

Greek bank slides again

National Bank of Greece's series A preferreds continued to decline in Tuesday trading as Moody's said a sovereign debt rollover would, in fact, be considered a credit event.

The shares lost $1.10, or 8.98%, to close at $11.15 (NYSE: NBGPA).

The preferreds had fallen in the previous session as well, erasing gains seen in Friday trading.

On Sunday, European Central Bank Governing Council member Nout Wellink said that banks are being asked to roll over their Greek debt at maturity, according to a Reuters report.

"We are trying, in what is called in official terms the Vienna initiative, to persuade banks to stay in those countries after 2012 and when debt matures to keep active in those countries," Wellink said.

Part of the draw of the debt rollover was that such an action would be considered voluntary. On Tuesday, however, Moody's analyst Bart Oosterveld, head of the sovereign risk group, said a rollover in this particular situation could not truly be voluntary and that it would be classified as a credit event.

The struggles of Greece are also spilling over into other European issuers, a trader said.

"We're seeing some places where people are lightening up," he said, particularly those places with "European exposure."

Allianz SE's over-the-counter-traded preferreds, for example, have become a "double-threat" as the shares are European and non-listed.

Still, the trader deemed the preferreds a "win-win," trading at $25.90.

"Ultimately, I love that piece of paper," he said.

Goodyear slips on dividend

Goodyear Tire & Rubber announced its first dividend since 2003 Tuesday, with a payout going to its 5.875% mandatorily convertible $100-par preferred holders.

On the news, the preferreds fell 23 cents to $24.45 (NYSE: GTPA).

Preferred holders will receive 74.25 cents per share on July 1.

The preferreds convert to common stock on April 1, 2014.

Goodyear is an Akron, Ohio-based tire manufacturer.

GM preferreds up

General Motors is reported to be considering a repurchase of stock held by the Department of the Treasury.

However, other news reports indicate that the government - which owns both common and preferred stock in the Detroit-based automaker - is hesitant to sell at current prices.

GM's 4.75% series B mandatorily convertible junior $100-par preferreds due Dec. 1, 2013 gained 12 cents to close at $46.95 (NYSE: GMPB).

Citi, RBS active, softer

Elsewhere in the preferred space, Citigroup Inc.'s series N preferreds were the day's most actively traded issue, according to a market source.

He said the shares dropped a dime to $27.84 (NYSE: CPN).

Royal Bank of Scotland plc's series G preferreds were also active and weaker, falling 8 cents to $16.28 (NYSE: RBSPG)

Ally Financial Inc. meantime rounded out the list. Its 8.125% series A shares slipped a nickel to $26.10 (NYSE: ALLYPA), while the 8.5% series B preferreds declined 12 cents to $26.15 (NYSE: ALLYPB).

© 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.