European debt deal boosts bank preferreds; CubeSmart talks new deal; recent new issues gain

By Stephanie N. Rotondo

Portland, Ore., Oct. 27 - Preferred stocks soared Thursday as a deal to help Greece and shore up European banks was brokered.

"Things are green all over," a trader said.

"I guess it's positive for the market," said one skeptical source of the deal.

European leaders released the current details of the plan, which include a plan for private banks and insurers to take a 50% loss on their Greek debt. The deal also increases the European Financial Stability Facility to $1.4 trillion.

Banks will also need to be recapitalized, according to the deal.

Although many details still need to be worked out - leaving room for speculation that the entire thing could blow up - the news gave the market a boost.

According to one preferred stock index, the market was up 1.85%, or 46 cents on average for $25-par preferreds.

"Obviously, that's a big move," a market source said.

In response, banks both foreign and domestic were gaining ground. Royal Bank of Scotland Group plc was among the day's biggest percentage gainer, as was National Bank of Greece SA.

In the new issue realm, yet another new deal was announced, this one from CubeSmart. The deal was expected to price late Thursday or sometime Friday, with talk around the 7.75% area.

New issues such as STAG Industrial Inc.'s 9% series A preferreds, which came on Wednesday, were doing well.

Goldman Sachs Group, Inc.'s recent. 6.5% $25-par notes meantime officially listed on the New York Stock Exchange.

Banks on the rise

A last-minute deal struck by European leaders Thursday helped the preferred stock market fly higher, and banks were seen leading the charge.

RBS issues were among the day's biggest percentage gainers. The 5.9% noncumulative series E guaranteed trust preferreds (NYSE: RBSPE) rose $1.40, or 13.02%, to $12.15, while the 6.125% noncumulative series R dollar preference shares (NYSE: RBSPR) moved up $1.38, or 11.17%, to $13.73.

Both issues are not paying dividends, but a market source said the series R preferreds are "more likely to pay sooner than the [series E trust preferreds]."

Meanwhile, National Bank of Greece's 9% series A preferreds (NYSE: NBGPA) earned 46 cents, or 11.53%, to close at $4.45.

Among other banks, Ally Financial Inc.'s preferreds were riding the wave. The 8.5% series A trust preferreds (NYSE: ALLYPA) closed up $1.34, or 6.69%, at $21.38, while the 8.125% series Bs (NYSE: ALLYPB) gained $1.15, or 6% to close at $20.32.

After trading down in the previous session, Morgan Stanley's 6.6% capital securities (NYSE: MSJ) ended 75 cents, or 3.39%, higher at $22.85.

Barclays Bank plc's 8.125% series 5 noncumulative callable dollar preference shares (NYSE: BCSPD) moved up 94 cents, or 3.94%, to $24.80, and Bank of America Corp.'s 8.2% series H depositary shares (NYSE: BACPH) climbed up 46 cents, or 1.95%, to $24.10.

CubeSmart plans new issue

CubeSmart, a Wayne, Pa.-based real estate investment trust, announced plans to sell at least $50 million of series A cumulative redeemable perpetual preferreds.

Price talk is around 7.75%, according to a trader. While speaking with Prospect News, he saw the paper quoted at $24.60 bid and then $24.70 bid in the grey market.

The company intends to use the proceeds to help fund a recently announced acquisition.

The new issue marks the fourth issue to be announced this week. Of those deals, two have already priced.

New deals gaining ground

STAG Industrial's $60 million issue of 9% preferreds, a deal that priced Wednesday, was "doing well," a trader said.

He pegged the issue at $24.77 in the grey market.

Summit Hotel Properties Inc.'s $50 million issue of 9.25% series A preferreds, a deal that priced Tuesday, was meantime deemed unchanged at $24.75.

Also, Goldman Sachs' 6.5% "baby bonds," a $500 million issue that came last week, officially listed on the NYSE under the symbol "GSJ." The issue closed at $24.89.

Goodrich new issue ahead?

A trader said Goodrich Corp. filed a shelf registration that covers the issuance of preferreds, which could indicate a new deal in the works.

"They use to have a preferred deal, but they called it," he said of the Charlotte, N.C.-based aerospace and defense industries systems company. "It could be a convert, but I doubt it."

Goodrich intends to use proceeds from the sale of the securities - whatever they might be - for general corporate purposes.

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