Morning Commentary: Banks’ preferreds mixed in response to stress test results

By Christine Van Dusen

Atlanta, March 6 – Preferred shares from the biggest banks in the United States on Friday reacted to the results of the Federal Reserve’s stress tests, which showed that the lenders are strong enough to live through a significant economic downturn.

In response, preferred stock trading was mixed on Friday morning, market sources said.

Bank of America Corp.’s 6.5% series Y noncumulative preferreds (NYSE: BACPY) traded Friday morning at $25.10, down from the previous day’s $25.54, while its 6.625% series W noncumulative preferreds (NYSE: BACPW) moved to $25.61 from $25.73. The Charlotte, N.C.-based bank’s stress-test results were the most improved year over year.

Citigroup Inc.’s results, which showed there could be a hefty equity loss, meant that Citi’s 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPK) traded Friday at $26.83, down from Thursday’s $26.90.

Goldman Sachs Group Inc., which was the only bank to surpass the total risked-based capital threshold, saw its 5.5% series J fixed-to-floating rate noncumulative preferreds (NYSE: GSPJ) trade Friday at $24.95, down from Thursday’s close of $25.09.

Morgan Stanley & Co. Inc.’s 6.875% series F fixed-to-floating rate noncumulative preferreds (NYSE: MSPF) ticked up a penny to $27.18 on Friday while its 6.375% series I fixed-to-floating rate noncumulative preferreds (NYSE: MSPI) were spotted at $26.29. On Thursday the notes were quoted at $26.34.

Wells Fargo & Co., which showed that it had 2% more than the minimum in every category, saw its 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) trade Friday at $25.90 after Thursday’s level of $26.03.

In other trading of preferreds on Friday morning, Barclays Bank plc’s 8.125% non-cumulative callable dollar preference shares series 5 ADR dipped 4 cents to $26.45 on 325,551 shares traded.

CBL & Associates Properties’ 7.375% depository shares cumulative redeemable preferred stock dipped 8 cents to $25.75 on 219,725 shares traded.

And Goldman Sachs’ depository shares floating-rate non-cumulative preferred stock, series D, rose a penny to $20.24 on 186,483 shares traded on Friday morning.

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