DTE new issue climbs; Ally preferreds gain as company halts loan purchases; BofA better

By Stephanie N. Rotondo

Portland, Ore., Dec. 2 - The preferred stock market "started off strong, then kind of faded on different rumors out of Europe," a trader reported Friday.

One such rumor, he said, was that Spain might soon be slapped with a downgrade. Additionally, he said news of conflict between Iran and Israel, as well as a new bill proposed by U.S. conservatives to prevent the International Monetary Fund from bailing out Italy and Spain did not help matters.

"Things pulled off even with good employment numbers," he said, referring to a new jobs report that indicated the U.S. had added 120,000 jobs in November and that the unemployment rate dropped to its lowest level in over two years to 8.6%.

"Initially on the employment numbers, the market jumped up big," said another market source. "Then it basically gave up half of its gains and rather quickly, actually."

Another trader noted chatter that regional banks could get downgraded next week.

In new issues, DTE Energy Co.'s recent $280 million issue of 6.5% $25-par junior subordinated notes continued to fly higher, traders reported.

Among secondary issues, Ally Financial Inc. paper was improving. The gains came as the company said it would stop purchasing mortgages in Massachusetts - just one day after the state attorney general, Martha Coakley, filed a lawsuit against five U.S. banks - including Ally and Bank of America Corp. - alleging improper foreclosure practices.

DTE wins again

Detroit-based energy provider DTE Energy saw its new 6.5% $25-par junior subordinated capital securities due 2061 climbing upward again on Friday.

The deal priced on Monday and quickly traded up to - and past - par.

A trader said the issue was "way up" in the gray market at $24.65. Another trader placed the notes around $24.60.

The first trader remarked that there was no trading symbol for the paper as of yet but opined that listing could take place mid-next week.

Among other recent deals, Aviva plc's $400 million issue of 8.25% subordinated capital securities (NYSE: AVV) had "found a base" around the $24.15 area, "which is good.

"I think this is a good buy," he added.

The notes closed down a nickel to $24.12.

Ally, BofA move up

Ally Financial's preferreds were trading actively and better on the day.

The 8.125% series A trust preferreds (NYSE: ALLYPA) gained 20 cents, or 1.06%, to $19.15, while the 8.5% series Bs (NYSE: ALLYPB) moved up 16 cents to $17.56.

The gains came as the company announced its GMAC Mortgage unit would no longer buy home loans in Massachusetts. The announcement came one day after the state's attorney general filed a lawsuit against the company and four other U.S. banks, alleging improper foreclosure practices.

"GMAC Mortgage has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable," the Detroit-based company said in a statement. "The company will continue to service its existing customers and honor its contractual obligations as a servicer. The company is disappointed that it can no longer participate in offering certain financing options in Massachusetts; however, it has an obligation to manage risks and deploy capital in an appropriate manner and in a way that protects the investment of the U.S. taxpayer."

Charlotte, N.C.-based Bank of America was also named in the lawsuit and after falling in the previous session, most of its issues came back a tad during Friday's session.

The 7.25% series J noncumulative preferreds (NYSE: BACPJ) rose 15 cents to $20.05, while the 8.625% series 8 noncumulative preferreds (NYSE: BMLPQ) gained 14 cents to $22.26.

The 8.2% series H depositary shares (NYSE: BACPH), however, dropped 3 cents to $22.00.

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