Preferred stock sellers, investors at standstill; Schwab preferreds hang in; RBS shares suffer

By Andrea Heisinger

New York, June 4 - The preferred stock market was void of new deals, and the secondary half of the market started the week with little activity on Monday, sources said.

Last week's deal from Charles Schwab Corp. was "hanging in all right," a trader said early in the afternoon.

Elsewhere in the market, there was "not a lot of chatter out there right now," a market source said.

The trader said that there was "very light volume" in the secondary and "no bids, no offers."

"Nobody's buying anything. There's a lot of news out there, but not a lot of execution," he said.

The market was on a rollercoaster all day, starting up 6 cents to 7 cents at the open, becoming flat, then rising again midday before flattening again and finishing up 8 cents at the close, a second trader said.

Still, the preferred market, after taking a hit a couple of weeks ago and then somewhat bouncing back, is "holding in better than the equity tape," the market source said. "We haven't seen a major drop."

Investors are awaiting some form of bank injection or deposit guarantee out of Europe for the euro zone, the market source said.

"There's a lack of direction," the second trader said about the market. "We're lacking direction, being a Monday. People are looking for focus from Europe and not finding any."

Schwab most active

The $425 million of $25-par 6% noncumulative perpetual preferred shares from Charles Schwab were quoted between $24.70 and $24.75 but had been in the $24.72 to $24.77 range earlier on Monday, a trader said.

"They never traded strong," he added. The preferreds had traded between $24.67 and $24.70 on Friday.

By the time the market closed, a second trader said that the preferreds were the most active of the day in a low-volume environment where no issue traded more than 500,000 units.

There were 484,000 Schwab preferreds that changed hands, and they closed off 8 cents at $24.72, the trader said.

Coming in behind Schwab was U.S. Bancorp's series N preferreds, which saw 427,000 shares trade. They ended up 5 cents at $25.95.

A series D preferred from Barclays Bank plc had 401,000 shares trade, a market source said, ending the day down 4 cents at $24.94.

Ally Financial Inc.'s series A preferreds had 395,000 shares trade, and they ended up 10 cents at $22.71.

RBS still suffers

Preferreds from Royal Bank of Scotland Group plc continued to take a beating amid continuing volatility out of the euro zone.

"RBS was hit a little bit," a trader said. "They're right in the worst spot - already so encumbered and still under government control. They still have a bloated balance sheet."

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