Greece woes remain focus; foreign banks suffer most; Countrywide declines on bankruptcy fears

By Stephanie N. Rotondo

Portland, Ore., Sept. 19 - Renewed, or perhaps continued, worries about the fate of Greece put pressure on preferred stocks Monday, especially on foreign banks such as Royal Bank of Scotland Group plc and ING Groep NV.

"Everybody is waiting to see what is going on with Greece," a trader said. At midday, he said RBS paper was down 60 cents to 70 cents across the board, while ING's preferreds had lost about 45 cents on average.

"There was lots of blood red today," said another market source, adding that volume was particularly light.

The source also noted that in the RBS complex, it was the preferreds that are currently not paying dividends that were hit the most.

Meanwhile, fears of a potential bankruptcy filing at Countrywide Financial Corp., combined with the fears of the broader market, weighed on the mortgage company's preferreds. Parent company Bank of America Corp. also saw its preferreds declining, though a trader said that at least one of the bank's issues outperformed the rest of the marketplace.

Foreign banks hurt by Greece

Greece held an emergency teleconference with its international creditors on Monday in an attempt to assure them that the country is devoted to stepping up its reforms and making budget cuts.

If Greece cannot appease its creditors, they could stop supplying the recession-laden country with cash - which would likely lead to a bankruptcy and soon.

The news did little to assuage investor worries, and foreign-based banks were getting hit as a result.

In particular, Royal Bank of Scotland's preferreds were among the day's biggest percentage losers.

The 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) and the 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT), non-paying issues that are expected to begin paying next year, "have gotten hammered the most," a market source said.

The Ss fell 85 cents, or 7.21%, to $10.94, while the Ts lost $1.15, or 8.71%, to close at $12.05.

ING's preferreds were also getting blasted, though not nearly as much as RBS. The 8.5% perpetual hybrid capital securities (NYSE: IGK) fell 41 cents, or 1.75%, to $23.00.

Barclays plc's 8.125% series 5 non-cumulative callable dollar preference shares (NYSE: BCSPD) dropped 14 cents, or 0.58%, to $23.90.

Countrywide preferreds decline

Investors, fearing a Chapter 11 filing, were filing out of Countrywide Financial paper Monday.

The 7% capital securities (NYSE: CFCPB) were the most actively traded securities of the day, with 1.25 million securities turning over. The issue closed down 40 cents, or 1.96%, at $19.98.

One market source, however, seemed exasperated at the recent articles that point to bankruptcy as a possibility, calling the news "dusty."

"It's always a possibility," he said. Still, he opined that there is "probably [a] low probability" that a filing will come.

Bank of America's 8.2% series H depositary shares (NYSE: BACPH) were the day's "outperformer relative to the whole market," the source said.

The shares fell only 2 cents to $23.48.

Bank of America is based in Charlotte, N.C., and owns Calabasas, Calif.-based Countrywide.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.