Preferreds rebound at month-end; investors keep focus on Greece; MetLife call on deck

By Stephanie N. Rotondo

Phoenix, June 30 – Preferred stocks were edging upward going into month-end as investors hoped for a last-minute debt deal in Greece.

“It’s a rumor of the hour kind of deal,” a market source said.

The Wells Fargo Hybrid and Preferred Securities index ended 20 basis points higher, though a source noted that it had been up higher earlier in the day.

Greece was given the chance to take a deal laid out by the European Commission that would free up enough cash for it to pay off €1.6 billion owed to the International Monetary Fund. The European Commission is claiming that it is the same as a deal offered on Friday, though Greek officials are claiming that it differs.

With Puerto Rico also about to default, the markets were hit pretty hard on Monday. However, the broader space was recovering Tuesday along with preferreds.

Still, liquidity remained thin, with one trader opining that the Greek and Puerto Rican debt issues – combined with a short holiday week – would keep volume constrained.

“Once everybody marks their positions today, unless anything major happens, it should be quiet all week,” he said.

Another source said “liquidity improved, but you wouldn’t call it great.”

MetLife to be called

MetLife Inc.’s 6.5% series B noncumulative preferreds (NYSE: METPB) were inching up again on Tuesday, rising a penny to par.

The preferreds had improved by a similar amount on Monday after the New York-based insurance company said 37.19 million of the preferred 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.

While the preferreds have been ticking higher, volume has been much weaker than it was before the tender offer expired.

Actives trade mixed

The day’s most actively traded paying and listed securities were mixed in Tuesday trading.

Ally Financial Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPA) were steady at $25.98, as were JPMorgan Chase & Co.’s 6.125% series Y noncumulative preferreds (NYSE: JPMPF), which closed at $24.91.

State Street Corp.’s 5.9% series D fixed-to-floating rate noncumulative preferreds (NYSE: STTPD), however, came in 3 cents to $25.67. Royal Bank of Scotland Group plc’s 6.08% noncumulative guaranteed trust preferred securities (NYSE: RBSPG) were also weaker, closing off 4 cents at $24.43.

But Morgan Stanley & Co. Inc.’s 6.375% series I fixed-to-floating rate noncumulative preferreds (NYSE: MSPI) managed to end 4 cents higher at $25.46.

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