Sovereign shares jump on plan to sell stock, bonds

Analysts said the plan could help alleviate concerns about whether the bank has enough cash.

The Philadelphia-based bank plans to sell $1 billion in stock, with Lehman Brothers managing the sale. The company also expects to sell $500 million in bonds at a fixed interest rate, due 2018.

Stifel Nicolaus analyst Collyn Bement Gilbert said the sale should ease investor worries about Sovereign's solvency, which are weighing on the company's stock. Sovereign's shares are down 67 percent in the past year.

Kenneth Usdin, an analyst with Banc of America Securities, said he expects the sale to "put a floor" under Sovereign's stock for now.

Shares of Sovereign added 28 cents, or 3.6 percent, to $8.14 in afternoon trading Monday. The stock has traded in a range of $6.48 and $24.47 in the past year.