Preferreds rise after volatile week; American Realty slides; TravelCenters lists on NYSE

By Stephanie N. Rotondo

Phoenix, Dec. 19 – Preferred stock continued to rally for the third straight day.

The rally began Wednesday following the Federal Reserve’s release of its latest policy statement, which indicated the central bank would be “patient” when it comes to deciding when to raise interest rates.

“It shot up in the last hour,” one market source noted.

The Wells Fargo Hybrid and Preferred Securities index ended the day 27 basis points better. It was up 10 bps at mid-morning.

Liquidity continued to be limited, however, as investors prepare for the upcoming holidays.

American Realty Capital Properties Inc. was once again the dominating name of the day, as investors continued to react – negatively – to the string of news that came out over the course of the week.

The 6.7% series F cumulative redeemable preferreds (Nasdaq: ARCPP) fell a dime to $21.15.

In a lawsuit filed on Thursday, Lisa P. McAlister – formerly the chief accounting officer and one of two executives that lost their jobs in the wake of an accounting irregularity that surfaced in October – alleged that it was Nicholas Schorsch, co-founder and former chief executive officer, who ordered her and Brian Block, former chief financial officer, to alter second-quarter results in order to cover up an error made in the first quarter.

McAlister claims she had concerns about following through with the orders, but that those concerns were ignored.

The company announced the issue in late October and said that McAlister and Block had resigned.

McAlister is seeking $50 million in damages in her defamation suit, which was brought against Schorsch, CEO David Kay and the company itself.

On Monday, the New York-based real estate investment trust said that Schorsch, Kay and Lisa Beeson, chief operating officer, were resigning their positions with the company. The announcement did not give a specific reason for the departures.

TravelCenters lists

TravelCenters of America LLC’s $120 million of 8% senior notes due 2029 began trading on the New York Stock Exchange on Friday.

The deal came Dec. 9. The symbol is “TANO.”

The notes ended the day at $24.70, up from opening levels of $24.50. A source quoted the issue at $24.63 bid, $24.70 offered.

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets LLC and UBS Securities LLC were the joint bookrunners. MLV & Co. LLC was the lead manager.

Proceeds will be used for general business purposes, including acquisitions and construction of additional travel centers and convenience stores, capital improvements to existing travel centers and stores and for other expansion activities.

TravelCenters is a Westlake, Ohio-based leading operator and franchisor of travel centers primarily along the U.S. interstate highway system.

Ally bailout over

Ally Financial Inc.’s preferreds were modestly higher Friday as the federal government announced it had sold off its remaining equity stake in the company.

The 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPA) rose a nickel to $26.29, while the 8.5% series A fixed-to-floating rate perpetual preferreds (NYSE: ALLYPB) improved 6 cents to $26.56.

The Treasury Department sold its remaining 54.9 million common shares of Ally at $23.25 per share, for a total of $1.3 billion. All told, the U.S. taxpayer received $19.6 billion from sale of the entire equity stake.

The company, formerly known as GMAC LLC and General Motors Co.’s financing arm, received $17.2 billion in its original bailout.

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