Preferred market topples on Greek bailout vote; Ally preferreds lose big; KeyCorp calls TRUPs

By Stephanie N. Rotondo

Portland, Ore., Nov. 1 - The preferred stock market got rocked Tuesday when Greece's prime minister called for a referendum vote on the ailing country's latest bailout package.

"Everything is getting beat up because of Greece," a trader said.

Another market source noted that it was "busier earlier in the day with the Greek panic."

While "better-quality stuff was holding up," riskier names like Ally Financial Inc. were seen falling more than a buck on the day.

Ally was also the day's biggest percentage loser among paying preferreds.

Late Monday, KeyCorp called its 6.75% enhanced trust preferreds. The news resulted in gains for the issue.

Also heading higher was BankAtlantic Bancorp, Inc.'s preferred issue. The sizable gains - the issue improved by nearly 100% - came as BB&T Corp. said it will take over the regional bank's retail lending unit.

Among recent new issues, Summit Hotel Properties Inc.'s latest deal officially listed on the New York Stock Exchange. According to a trader, the paper was quoted with wide spreads.

Ally preferreds sink

Ally Financial's two series of preferreds made the day's biggest percentage loser list among currently paying issues.

The 8.125% series A trust preferreds (NYSE: ALLYPA) fell $1.11, or 5.3%, to $19.85. The 8.5% series B trust preferreds (NYSE: ALLYPB) dropped $1.10, or 5.69%, to $18.22.

The general declines in the market were precipitated by comments made by Greek prime minister George Papandreou Tuesday. He called for a referendum vote on the country's latest bailout package, risking a government meltdown if the bailout is not approved.

Given that the country has been besieged by riots due to hefty austerity measures, it seems unlikely that voters will go for it. As such, some in Greek parliament are calling for Papandreou's resignation.

Greece is currently seeking a €130 billion rescue package to help the cash-strapped nation avoid bankruptcy.

KeyCorp rises on call

KeyCorp said late Monday it will redeem about $331 million of KeyCorp Capital IX's 6.75% enhanced trust preferreds.

The news helped the issue (NYSE: KEYPE) move up 24 cents to $25.36.

The redemption with be funded with cash on hand. Holders will receive par plus accrued dividends.

The redemption will occur Dec. 15, according to an 8-K filing with the Securities and Exchange Commission.

KeyCorp is a Cleveland-based bank holding company.

BankAtlantic up on buyout

BankAtlantic Bancorp's 8.5% trust preferreds (Nasdaq: BBXT) gained ground after BB&T announced it will buy the regional bank's retail lending unit in Florida.

The paper gained $10.95, or 99.55%, to end at $21.95.

"So that's a good thing, I guess," a trader said.

BB&T will pay a premium of about 9% for the unit, which will add about $2.1 billion of loans and $3.3 billion of deposits to the ninth-largest bank.

"This acquisition of BankAtlantic is a compelling strategic expansion into important long-term markets in Southeast Florida," Kelly S. King, BB&T's chairman and chief executive officer, said in a statement. "The acquisition of BankAtlantic is accretive to earnings per share and comfortably exceeds our internal rate of return objective."

Summit deal lists

Summit Hotel Properties' recent $50 million issue of 9.25% series A cumulative redeemable preferreds officially listed on the NYSE Tuesday. The symbol is "INNPrA."

Earlier in the day, a trader quoted the issue wide at $24.25 bid, $24.70 offered.

The issue closed at $24.25.

Among other recent new issues, CubeSmart's $70 million of 7.75% series A cumulative redeemable preferreds were seen at $24.80, an improvement from the day before.

STAG Industrial Inc.'s $60 million of 9% series A cumulative redeemable preferreds were quoted at $24.80 bid, $24.85 offered.

And, Goldman Sachs Group, Inc.'s 6.5% 50-year $25-par notes (NYSE: GSJ) slid 9 cents to $24.67.

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