National Bank of Greece dives on downgrade; JPMorgan mixed; Citigroup up ahead of numbers

By Stephanie N. Rotondo

Portland, Ore., July 14 - Preferred stocks held in there for the most part, traders reported Thursday. Even Wednesday's downgrade warning from Moody's Investors Service on the United States' debt caused little movement in the marketplace.

"There were a little bit of sellers this morning," a trader said. "Everybody seems to think Italy has got their act together." The country's senate voted to approve an austerity package.

"We were looking kind of mixed today," said another market source. He also remarked that Italy's vote on the austerity plan "was one of the things that helped firm up the market."

Still, fears of contagion remained, especially given that the European Banking Commission planned to release the results of a second round of stress tests Friday.

"I think it's going to be much ado about nothing," the source said, noting that the results will likely be "predictable."

"Post-bailout, [the Irish banks] could be OK now," he said. "Obviously, Greece is a problem."

He was not the only one to point to Greece's troubles. Fitch Ratings downgraded five Greek banks Thursday, including National Bank of Greece SA. As a result, the bank's preferreds dropped nearly 13% on the day.

Meanwhile, JPMorgan Chase & Co. reported earnings during the session. Despite a 13% increase in profit, the bank's preferred stock ended the day mixed.

In other earnings-related moves, Citigroup Inc.'s preferred securities moved up ahead of the Friday earnings release. Bank of America Corp., on the other hand, was down as investors prepared for results on Tuesday.

Williams Cos. Inc. increased its offer for Southern Union Co. to $5.5 billion in an all-cash offer. Though some market players are opining that the board will have to take the sweetened offer, the company's hybrid securities drifted downward.

Greek bank plummets

Fitch downgraded National Bank of Greece's long-term issuer default ratings to B- from B+. The ratings remain on Rating Watch negative.

The downgrade came on the heels of a downgrade of the country of Greece. Fitch also noted that the bank's creditworthiness was in question.

Along with National Bank, Fitch cut its ratings on Efg Eurobank Ergasias, Alpha Bank, Piraeus Bank and Agricultural Bank of Greece.

National Bank of Greece's 9% series A preferreds (NYSE: NBGPA) fell 90 cents, or 12.91%, to $6.09.

JPMorgan mixed on earnings

JPMorgan reported a 13% increase in profits for the second quarter, but the bank's preferreds closed mixed all the same.

The series I depositary shares (NYSE: JPMPI) closed 8 cents higher at $28.10. The series B capital X securities (NYSE: JPMPB), however, slipped a penny to $25.83, while the series Z capital securities (NYSE: JMPPZ) fell 3 cents to $26.17.

For the quarter, JPMorgan posted a 7% increase in revenue to $27.41 billion. Net profit was $5.43 billion.

The bank was also well within the necessary range to meet Basel III capital regulations. Its capital position was at 7.6%.

Citi gains, BofA dips

More earnings are on the horizon, including Citigroup on Friday and Bank of America on Tuesday.

Ahead of its release, Citi's 8.5% series J preferreds (NYSE: CPJ) gained a nickel, closing at $25.82.

Bank of America's series Q preferreds (NYSE: BMLPQ) meantime lost 4 cents, ending at $26.26, while Merrill Lynch's 6.45% series K preferreds (NYSE: MERPK) dropped 2 cents - "in line with the market average," a market source said - to $23.65.

Southern Union slips

Williams stepped up its attack against rival bidder Energy Transfer Equity LP, once again increasing its offer for Southern Union.

Williams is now offering $5.5 billion, or $44.00 per share, in an all-cash transaction.

Energy Transfer last bid $40.00 per share.

"That's obviously a very interesting story," a source said. "It's such a good offer. Unless there is a counteroffer, it would be hard for the board to do anything but approve it."

Despite the increased offer, Southern Union's 7.2% $100-par hybrid securities dropped 75 cents to $92.75, according to the source.

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