Ally issues gain in active trading; First Niagara new issue listing expected soon; ING gains

By Stephanie N. Rotondo

Portland, Ore., Dec. 13 - Preferred stocks were faring better in Tuesday trading after falling in the previous session, according to market sources.

Volume remained muted.

Ally Financial Inc. paper was trading busily and better during the session. However, a market source said the action was "nothing out of the ordinary for them" and thought that news regarding a potential mortgage settlement was not a driving force.

First Niagara Financial Group Inc.'s new issue was weakening slightly. Though sources had no explanation for it other than market volatility, they also suspected that the deal was going to officially list on the New York Stock Exchange this week.

"I would think it gets done sooner [rather] than later," a source said, noting that at this point, it was all rumor and speculation.

"Only the exchange knows for sure," he said.

Ally shares head upward

Ally Financial's preferreds were among the day's biggest traders, and both issues were trending higher.

The 8.125% series A preferreds (NYSE: ALLYPA) rose a dime to $19.73, while the 8.5% series B preferreds (NYSE: ALLYPB) gained 13 cents to end at $17.75.

"The volume was not out of their normal range," a market source said, adding that he did not think talk of a potential mortgage lawsuit settlement in the near future had much to do with the gains.

"When liquidity goes down, volatility tends to go up," he said.

Chatter has it that several states are getting ready to sign off on a $19 billion settlement with banks regarding their improper foreclosure practices. However, the settlement won't be the final word because several states, including New York, California and Massachusetts, have opted out of settlement discussions and have filed lawsuits of their own.

Still, if a settlement with the majority of states is reached soon, "it could help these banks move up," a trader said.

First Niagara listing expected

First Niagara's fixed-to-floating-rate series B preferreds - a $350 million issue that priced at 8.625% on Dec. 7 - were losing ground Tuesday.

A trader saw the securities trade at $25.15 bid, $25.20 offered.

The trader opined that the deal would list in the next couple of days.

"It should be pretty soon," he said.

"It wouldn't surprise me," said another source. "It's not unreasonable to think that it will."

However, the second source noted that it was all conjecture at this point.

The issue from the Buffalo-based regional bank will be fixed at a rate of 8.625% for five years, at which time the rate will be Libor plus 732.7 basis points.

Settlement is expected Wednesday.

Goldman Sachs & Co. is the global coordinator. Bank of America Merrill Lynch is the physical bookrunner. Goldman Sachs, Merrill Lynch and Wells Fargo Securities, LLC are the joint bookrunning managers. Citigroup Global Markets Inc. is the joint lead manager, and Sandler O'Neill + Partners, LP is co-manager.

Proceeds will be used to complete the bank's acquisition of branches of HSBC Bank USA, NA, which was announced July 31.

Among other recent deals, DTE Energy Co.'s 6.5% $25-par 2011 series junior subordinated notes due 2061 (NYSE: DTZ) made the day's most active list, climbing 7 cents to $25.74.

Key falls, ING gains

Among other active issues, KeyCorp's 6.75% enhanced trust preferreds (NYSE: KEYPE) fell a penny to $24.98.

Volume in the issue was over 804,000 trust preferreds, which a source said occurred mostly in one trade.

"It's probably a client looking for liquidity," he said. He also remarked that for that volume, losing just a penny was "not that bad."

Also, ING Groep NV's 7.375% perpetual hybrid capital securities (NYSE: IDG) were busy, trading up 11 cents to $18.67.

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