Preferreds drop on Greece, China concerns; MetLife wraps tender offer for 6.5% preferreds

By Stephanie N. Rotondo

Phoenix, June 29 – A preferred stock trader said the market was “very quiet” as investors kept an eye on Greece.

Debt talks between the nation and the European Union fell apart over the weekend. Greek prime minister Alexis Tsipras called for a referendum vote on July 5, closed banks for the week and limited cash machine withdrawals as Tuesday’s deadline fast approaches.

Though the talks failed to bring about any deal this weekend, several European leaders, including German chancellor Angela Merkel, indicated that they were still open to negotiations.

Greece has a €1.6 billion payment due to the International Monetary Fund on Tuesday, the same day the terms of its E.U. bailout expire. If the country fails to pay, it will constitute a default and could result in an E.U. exit.

Meanwhile, news out of China was also weighing on the markets, as the country cut interest rates over the weekend in order to outweigh a huge market loss on Friday.

Given the news and its impact on the markets, a trader said he “thought we would have had a bigger sell-off.”

Instead, the markets initially looked to be taking the news as a “non-event,” though things were certainly weaker. But as the day wore on, the picture got a little bleaker.

The Wells Fargo Hybrid and Preferred Securities index finished down 26 basis points, equal to about 6.5 cents for $25-par issues. The index was down 17 bps, or just over 4 cents per $25-par share, at mid-morning.

MetLife tender done

In the secondary, MetLife Inc.’s 6.5% series B noncumulative preferreds (NYSE: METPB) were inching up a penny to $24.99 after the New York-based insurance company said 37.19 million of the shares had been validly tendered.

The company launched the tender June 1, and it expired Friday at midnight ET. Holders that participated in the exchange received par plus accrued dividends.

As for the remaining outstanding shares – just under 23 million of them – those will be called at par, with no accrued dividends, on Wednesday.

GE sells more assets

General Electric Capital Corp.’s $25-par notes were mixed in Monday trading, as the parent company, General Electric Co., announced an asset sale.

The 4.875% $25-par notes due 2052 (NYSE: GEB) closed off 2 cents at $24.89, while the 4.7% $25-par notes due 2053 rose 6 cents to $24.47.

As part of a larger plan to move away from the banking space, GE agreed to sell its vehicle-fleet licensing business in the United States, Mexico, Australia and New Zealand to Element Financial Corp.

The sale is valued at $6.9 billion.

Additionally, GE said it was in talks with Arval – a unit of BNP Paribas SA – to sell its European fleet business for about $2.68 billion.

Investors have long been pushing the parent company to get out of banking, as new federal regulations have weighed on the bottom line. GE finally got on board and has started to sell off nearly all of GE Capital’s $500 billion in assets. The ball got rolling in early June when the private equity lending unit was sold to Canada’s largest pension for $12 billion.

The unit expects to sell off about $100 billion in assets by the end of the year and be done with its efforts by the end of 2016.

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