Preferred market gets boost; Maiden bids edge up; Ally paper stages comeback; HSBC, Citi firm

By Stephanie N. Rotondo

Portland, Ore., June 21 - The first day of summer brought a ray of sunshine to the preferred market Tuesday, according to traders.

"Everything kind of bounced up today," a trader said, though he was not sure what had brought about the gains. He said it was possible the increases came because the market had been "oversold, I presume."

"We finished a little bit stronger," said another trader. However, he noted that there was a slight bit of end-of-day weakness, which he said could be due to Greek concerns - the market was awaiting a confidence vote scheduled for 5 p.m. ET - or to accounts "resetting shorts."

Maiden Holdings North America Ltd.'s recent 8.25% $25-par senior notes broke from the syndicate, a trader reported. That did little to help the new issue, though the general positive tone of the marketplace did lift the bids a bit.

A trader remarked that there was "no news of new issues" for the week.

Meanwhile, Ally Financial Inc.'s preferreds again dominated the market. But the large seller that was pushing down the preferreds last week seemed to have stopped, and the issues attempted to regain lost ground.

HSBC Holdings plc and Citigroup Inc. were also active in the $25-par arena. The banks saw their preferreds gain, even after reports out Monday that indicated they would have higher capital requirements under the Basel III regulations.

Maiden sees higher bids

A trader said Maiden Holdings North America's recent $100 million offering of 8.25% 30-year $25-par senior notes "freed to trade" on Tuesday. The deal priced Friday.

Early in the day, he saw a $24.62 bid, down from offerings around $24.75 on Monday. As the market headed higher, so did the notes, which then closed at $24.70 bid, no offers.

Ally regains ground

Last week, traders speculated that one large seller was to blame for heavy losses in Ally Financial's preferreds. One trader went so far as to say the preferreds would be a good buy "if we can just get the seller out of the way."

He might have gotten his wish on Tuesday, as the preferreds traded up and once again dominated trading.

The 8.5% series A preferreds (NYSE: ALLYPA) closed 35 cents higher at $25.05 on volume of about 3.07 million shares. The 8.125% series B preferreds (NYSE: ALLYPB) were also up 35 cents at $24.70. About 1.38 million of the Bs turned over.

On Tuesday, the Detroit-based automotive financial services firm said it was launching a registered exchange offer for its 6.25% senior guaranteed notes due 2017. It is offering new notes that are substantially identical to the old notes except that the new notes have been registered under the Securities Act.

The 6.25% notes were issued in a private placement on Nov. 18, 2010. The $1 billion face value issue was sold at a discount.

HSBC, Citi trend upward

HSBC Holdings and Citigroup made the day's most active list, and the banks' preferreds were trading upward.

HSBC's series H paper (NYSE: HBAPH) gained 19 cents, closing at $24.81, with 590,360 shares trading. The series Bs (NYSE: HSBCPB) ended 32 cents higher at 423.67, with 421,500 shares trading.

Citi's floating-rate series Js (NYSE: CPJ) inched up a penny to $26.00 on volume of 420,400 shares.

On Monday, news reports cited a Morgan Stanley analysis that claimed that banks such as Citi and HSBC would be subject to the highest capital requirements under new rules proposed by the Basel Committee on Banking Supervision.

The banks could face surcharges of up to 2.5%, the report said. The committee has already said that all banks need to have 7% of tier 1 capital, and the 2.5% surcharge would be on top of that amount.

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