Popular Shares Jump As Bank Prices Debt Exchange

NEW YORK (AP) — Shares of Popular Inc., parent of Banco Popular, soared Wednesday after the bank priced a debt exchange offer it is launching to bolster its balance sheet.

Keefe, Bruyette & Woods Inc. analyst Bain Slack upgraded the shares Wednesday to "Outperform" from "Market Perform" because of the debt exchange and expectations it will allow the bank to survive the ongoing recession.

Shares of San Juan, Puerto Rico-based Popular rose 34 cents, or 19 percent, to $2.10 in morning trading. Shares have traded between $1 and $12.45 during the past year.

Popular set an exchange price of $2.50 per share, which helped buoy trading.

Popular, like most banks, has been facing mounting loan losses amid the ongoing recession and downturn in the housing market. It has also been hit hard by losses on investments tied to mortgages, which have hurt its profitability during the credit crisis and current downturn.

The debt exchange, which is similar to what other banks have done in recent months, allows Popular to simultaneously boost key capital ratios by increasing its ownership base and eliminate debt and interest payments that could have led to a liquidity squeeze.