Santander is day's big loser as fears about Spain mount; PNC calls National City preferreds

By Stephanie N. Rotondo

Portland, Ore., April 10 - Preferred stocks were again on the decline Tuesday, following the trend set by common equities.

"Everything is basically a little softer," a trader said.

Another market source said there was "a lot of red out there" and that volume was modest but better than it has been.

The source further remarked that fears about Spain were "what was driving the whole market."

That was certainly the case for Banco Santander SA's preferreds, which got dubbed the day's biggest losers. One issue of the Spanish bank's preferreds dropped more than 5% during Tuesday's session.

On the upside, PNC Financial Services Group Inc. called National City Capital Trust III's $500 million of 6.625% trust preferreds, which gave the issue a modest boost.

The primary market remained subdued.

"It's quiet all of a sudden," one trader said, noting that last week had a pretty active new issue calendar.

Santander the big loser

Spain's debt woes put pressure on Banco Santander preferreds.

"There's additional fears coming out of Europe with Spanish debt [and Spain] having difficulty raising money at [attractive] yields," a trader said.

The bank's 10.5% series 10 noncumulative guaranteed preferreds (NYSE: STDPE) fared the best on the day, losing only 20 cents to close at $26.48. The 6.8% series 4 noncumulative guaranteed preferreds (NYSE: STDPA) dropped 76 cents, or 3.26%, to $22.55.

The floating-rate series 6 noncumulative guaranteed preferreds (NYSE: STDPB) meantime declined 81 cents, or 4.71%, to $16.40, and the 6.41% series 1 noncumulative guaranteed preferreds (NYSE: STDPI) fell the most, closing down $1.13, or 5.15%, at $20.79.

On Monday, Spain's government unveiled an austerity plan that would cut its budget by €10 billion. But the hefty cuts did little to assure investors that the country would not need a bailout, resulting in soaring yields on the country's sovereign debt. The country's 10-year borrowing costs have also gone up in the last month.

PNC heralds redemption

PNC Financial Services Group said Tuesday that it will redeem National City Capital Trust III's 6.625% trust preferreds due 2047 on May 25.

The securities (NYSE: NCCPB) rose 18 cents on the news, finishing the day at $25.54.

The call price is $25.00 plus accrued dividends.

The redemption is consistent with the company's capital plan, as approved by the Federal Reserve, and will be funded with available cash.

PNC is a Pittsburgh-based diversified financial services company.

Financials fall

Elsewhere in the secondary arena, Royal Bank of Scotland Group plc's 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) were again the dominant securities of the day.

The issue fell 13 cents to $18.79, with 1.64 million shares changing hands.

Also active were Bank of America Corp.'s 8.2% series H noncumulative preferreds (NYSE: BACPH), which lost 16 cents, ending at $25.50.

Barclays plc's 8.125% series 5 noncumulative callable dollar preference shares (NYSE: BCSPD) closed at $25.14, down 34 cents, or 1.33%.

And Ally Financial Inc.'s 8.125% trust preferreds (NYSE: ALLYPA) declined by 11 cents, closing at $22.70.

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