Aviva takes cue from market, falls; possibility of more regulations pressures Bank of America

By Stephanie N. Rotondo

Portland, Ore., Nov. 22 - It was a "mostly red" day for preferred stocks, a market source reported Tuesday.

He noted that volume overall was moderate to light, and others remarked that the upcoming holiday had resulted in several empty desks.

"We're going into Thanksgiving," a trader said. "That's the way of the game."

Aviva plc's recent issue of 8.25% $25-par capital securities was fading with the overall market. Sources noted that the deal was expected to list on the New York Stock Exchange on Wednesday.

Bank of America Corp. preferreds were on the decline amid active trading. The weakness was blamed on news stories that indicated the bank might be facing more government regulations.

Aviva set to list

Aviva's $400 million issue of 8.25% $25-par capital securities due 2041 is expected to list on the NYSE on Wednesday. The ticker symbol is reported to be "AVV."

However, one trader said he heard the listing was postponed until Friday.

"Why would you wait until the day after Thanksgiving?" said another source. He added that just because he hadn't heard such things didn't mean it wasn't accurate.

The sources could agree, however, that the new issue came under pressure given the state of the broader market.

One trader saw the notes offered at $24.50 shortly before the market closed.

After the bell, a trader quoted the issue at $24.25 bid, $24.50 offered.

At another desk, a source pegged the paper at $24.44, noting that there was one trade as low as $23.60. Of larger-sized trades, he said the context was more $24.50 to $24.55.

The London-based insurance company priced the deal on Friday. It freed from the syndicate on Monday.

In other recent deals, Winthrop Realty Trust's 9.25% series D cumulative redeemable preferreds freed to trade, according to a trader.

He saw the issue trading around $24.25.

The Boston-based real estate investment trust priced the $40 million issue on Friday.

More regulation for BofA?

Bank of America's preferred stock was drifting downward as news outlets reported that the Charlotte, N.C.-based bank could be facing more government regulations if it hasn't strengthened its balance sheet enough.

The Merrill Lynch 8.625% series 8 noncumulative preferreds (NYSE: BMLPQ dropped 54 cents, or 2.32%, to $22.71. The floating-rate series 5 noncumulative preferreds (NYSE: BMLPL) fell 53 cents, or 2.86%, to $18.03. The 8.2% series H depositary shares (NYSE: BACPH) declined by 65 cents, or 2.75%, to $22.95.

The Wall Street Journal reported Tuesday that U.S. regulators recently met with Bank of America executives regarding a 2009 memorandum of understanding. The memo from the regulators to the bank indicated that there were certain areas - governance, risk and liquidity management - that needed improvement. Meetings held in recent months were aimed at figuring out if the bank was in compliance with the memo, specifically the part about governance.

According to the news article, regulators were particularly concerned about executive turnover. If it is decided that the bank is not in compliance, regulators could impose more stringent restrictions on the bank.

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