Preferreds struggle to get back in game after long holiday weekend; Deutsche Bank, Ally firm

By Stephanie N. Rotondo

Phoenix, Sept. 4 - The preferred stock market's first trading day of September was slow-going as players attempted to get back in the swing of things after a long weekend.

In some cases, players were just returning from weeklong end-of-summer vacations.

"It's very quiet," a trader said. "The secondary is barely doing anything. Volume is low. I haven't heard any word on new issues this week or next.

"It's the slowest day yet, worse than Friday."

The trader opined that there was a lack of any catalyst - "anything to act on" - to get the market moving one way or another. Europe and even the state of the United States remain "in flux," he said, giving little reason to jump in and take action.

However, he also noted that a break in the new issue supply "still might help us soak up some liquidity."

After the market closed for the day, a market source disagreed with the first trader, stating that there was "definitely better volume than we had at the end of last week."

He also said that the preferred realm was "up a touch, not a lot."

Deutsche Bank AG's 6.55% trust preferreds (NYSE: DXB) were easily the day's biggest trader. There was no news to spark the movement, but more than 2 million trust preferreds changed hands.

Ally Financial Inc. was meantime trading actively and higher during the session. As with Deutsche Bank, there was no credit-specific news to push the paper around, but there was a new study out that indicates auto lenders are again lending to subprime borrowers.

Deutsche Bank dominates

Deutsche Bank's 6.55% trust preferreds dominated trading Tuesday, with over 2 million of them turning over.

The securities ended up 6 cents at $25.13. Midday levels were around $25.11.

There was no news out to explain why the preferreds were so heavily traded, but one market source speculated that it was "portfolio rearranging."

"There's only a few guys that could have done that trade in the marketplace," he said.

Ally preferreds firm

Detroit-based Ally Financial saw its preferreds moving about actively, with both issues ending on the firm side.

The 8.125% series 2 fixed-to-floating-rate trust preferreds (NYSE: ALLYPA) rose 13 cents to $24.95, while the 8.5% series A fixed-to-floating-rate perpetual preferreds (NYSE: ALLYPB) increased 2 cents to $24.56.

There was no news out on the company. However, Experian plc's auto finance research unit released a study Tuesday that shows U.S. auto lenders are again lending to subprime borrowers at levels seen before the financial crisis.

But Ally - currently the largest among auto lenders - saw its total new car loan market share fall in the second quarter to 6.68% from 6.93% the year before. That trend could continue given that Ally's exclusive commitments with General Motors Co. and Chrysler LLC expire in 2013.

JPMorgan climbs back over par

JPMorgan Chase & Co.'s 5.5% series O noncumulative preferreds were seen trading above par again. A trader said the preferreds were offered at $25.05.

The deal has yet to list on the New York Stock Exchange, which is puzzling in an environment where securities have been listing rapidly post-pricing. The trader said he expects the issue to list by the end of the week, though he had not heard if that would in fact be the case or not.

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