Bank of America dominates trading, issues mixed; Comerica to redeem Sterling trust preferreds

By Stephanie N. Rotondo

Portland, Ore., Sept. 26 - Preferred stocks ended mixed in Monday trading, and a trader said he was "not really seeing anything that was pushing preferreds one way or another."

The trader noted that the market continued to wait to see how the mortgage lawsuits will shake out and how Europe will handle its fiscal crisis.

"Once it gets moving in either direction, I think this market could really fly," he said.

At another desk, a trader said that "people are really sensitive to tier I capital" and that the sensitivity is "filtering into our market."

He remarked that investors remain concerned over Bank of America Corp. and its Countrywide Financial Corp. unit. It was therefore no surprise that the top trading issues of the day were all linked to the Charlotte, N.C.-based bank.

Meanwhile, Comerica Inc. announced that it will redeem all the remaining trust preferreds issued under the Sterling Bancshares Capital Trust III moniker.

Also, money management firm First Trust said it plans to launch a preferred stock exchange-traded fund. One market source said the news could "bode well" for the preferred market as a whole.

Bank of America busy, mixed

Bank of America issues were among the day's busiest securities, according to a market source.

At midday, another trader noted that the majority of the bank preferreds were "down on no news, and the common is doing fine."

The Merrill Lynch 8.625% series Q noncumulative depositary shares (NYSE: BMLPQ) were the most active preferreds of the day with over 2.2 million shares changing hands. They fell a quarter, or 1.12%, to $22.10.

The 8.2% series H depositary shares (NYSE: BACPH) were also active, with volume of 1.65 million shares. They lost 26 cents, or 1.17%, to close at $22.02.

Meanwhile, the 7% capital securities of Countrywide (NYSE: CFCPB) finished up 7 cents at $19.88. The 6.75% trust preferreds (NYSE: CFCPA) were also better, rising 31 cents, or 1.54%, to close at $20.38.

Comerica announces redemption

Dallas-based Comerica said Monday that it intends to redeem Sterling Bancshares Capital Trust III's $31.25 million of 8.3% trust preferreds.

The trust preferreds will be redeemed at par plus accrued dividends on Oct. 27 using available cash on hand.

A trader said the issue is "not a bad piece of paper."

The trust preferreds (Nasdaq: SBIBN) fell 11 cents to $25.30.

First Trust plans ETF

First Trust, a Wheaton, Ill.-based money management firm, is planning to launch a preferred stock ETF, according to filings with the Securities and Exchange Commission.

The new fund, called the First Trust Preferred Securities and Income ETF, will invest about 80% of its holdings into preferred or preferred-like securities. About 25% of its investments will be in financial companies, including banks and real estate investment trusts.

"Anytime anybody is launching a fund like that, it bodes well," a market source said, noting that to start such a fund, "they have to buy."

The source said the fund might be looking to take advantage of the"8%-plus yields" that are currently populating the preferred market.

"I don't think it will be a bad thing, for sure," he said.

First Trust issued only preliminary details in its regulatory paperwork.

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