Bank of America continues to dominate preferred market; Barclays among day's biggest gainers

By Stephanie N. Rotondo

Portland, Ore., Sept. 27 - Preferred stocks closed higher on Tuesday as hopes that Europe will sort out the Greece situation continued to soar.

"Everything is up," a trader said. "Europe had a very strong day, and we're following suit."

He noted that a Barclays plc analyst said there is an 80% probability that some sort of a deal will be worked out with Greece, which is rapidly approaching a potential default. That helped firm things up, he said.

But it wasn't only Europe that was a factor in the day's strength.

"It could be that guys are going into quarter-end and people are buying up or rebalancing their portfolios," he said.

Banks, both foreign and domestic, continued to dominate the trading space. Bank of America Corp. was busy and better. For its part, Barclays was one of the day's biggest percentage gainers.

Meanwhile, CommonWealth REIT was another actively traded security. There has been no fresh news out, however, since last week when the company said it is selling 13 of its properties.

Bank of America tops market

Bank of America issues were once again dominating trading, according to a market source.

The Merrill Lynch 8.625% series 8 depositary shares (NYSE: BMLPQ) traded up 43 cents, or 1.95%, to $22.53 on volume of about 1.3 million shares.

The 8.2% series H depositary shares (NYSE: BACPH) were also busy, with nearly 676,000 shares turning over. They rose 33 cents, or 1.5%, to close at $22.35.

The 7% capital securities of Countrywide Financial Corp. (NYSE: CFCPB) ended 9 cents higher at $19.97, with 1.28 million securities trading.

Also busy were HSBC Holdings plc's 8% perpetual subordinated capital securities (NYSE: HCSPB), which are exchangeable for preferreds. They gained 37 cents, or 1.47%, to close at $25.54. Just over 764,000 securities traded.

Big gains for Barclays

Barclays' 7.1% noncumulative callable dollar preference shares (NYSE: BCSPA) were one of the day's biggest percentage gainers, a market source said.

The issue increased by $1.21, or 6.05%, to $21.22.

The 6.625% noncumulative callable dollar preference shares (NYSE: BCSP) meantime gained $1.08, or 5.79%, to finish at $19.74.

CommonWealth moves higher

CommonWealth REIT's 6.5% series D cumulative convertible preferreds (NYSE: CWHPD) were among the day's most heavily traded securities, though there hasn't been any fresh news out on the company since last week.

The preferreds traded up 14 cents to $20.95 on volume of about 489,000 preferreds.

On Sept. 20, CommonWealth announced it had entered into "a series of 13 agreements" in which it agreed to sell 13 of its suburban properties for $167 million in cash.

The properties will be purchased by Senior Housing Properties Trust, a unit that was formerly a subsidiary of CommonWealth until it was spun off in 1999.

Rumors of RBC repack

A trader said that the rumor mill is buzzing that Royal Bank of Canada plans to "repack" bonds into $25-par preferreds.

"It was a popular product five years ago," the trader said. The repacks were typically sold to retail clients.

However, with the financial crisis of 2007 and the subsequent blow-up of Lehman Brothers, the products fell out of fashion. It did not help matters that a series of class-action lawsuits related to the products then followed.

The trader said he heard it was a small deal of just 1 million preferreds. However, he noted that it had a "decent coupon" of 6.7%.

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