PNC Secondary Likely Soon

S&P mistakenly let the cat out of the bag that PNC will do a $3 billion secondary. The secondary will likely be in the very near future. If the regional banks start raising capital it will be a market negative. Supply.

4 comments:

PJ said...

They certainly need a ton of capital.

Best to raise it soon. With the HAMP program ending, a host of foreclosures are going to have to be dumped on the market this spring/summer. Coinciding as they will with the expiration of the homebuyer tax credit, and a likely rise in mortgage rates as Fed programs expire, this will drive down home prices. That will push up mortgage delinquencies as 10 mn homeowners are already 20%+ underwater on mortgages. With higher mortgage loss reserves plus continued deterioration in CRE, and difficulty earning money with little new loan origination, bank earnings will get clobbered in Q2/Q3/Q4 2010.

Kudos to PNC for getting in line around the top of the market.

Tsachy Mishal said...

The S&P slip will likely cost them because they will have to sell at lower prices. The stock is down $1.30 in an up tape.

PJ said...

Bank capital raises for TARP reimbursement have been going at a 10% discount to market price. A 2% drop in the market price probably won't hurt the offering price much. Might give investors confidence to take a lesser discount.

Tsachy Mishal said...

Bottom line is that the offering sucks up sidelined cash. That or other securities are sold. In the short run it is bad for the market.