Trader: Seller unloading Ally preferreds, causing gyrations; Maiden prices $25-par bond issue

By Stephanie N. Rotondo

Portland, Ore., June 17 - Preferred stocks ended Friday's session mostly firm, traders reported.

The day's focus was on Ally Financial Inc., one trader remarked.

"Everybody was hyper-focused on Ally's [preferreds]," he said.

The series A preferreds headed into higher territory first thing, briefly trading above par before coming back under the $25 mark.

The series B preferreds also gyrated throughout the day, and rumors were circulating that the movements in both series of preferreds were due to a single seller.

In new issues, Maiden Holdings North America Ltd. reportedly priced an upsized offering of $25-par senior notes. A trader said the deal wasn't "falling apart" but was not doing well.

Ally dominates again, gyrates

A preferred trader said it was the Ally show during Friday's session.

"Ally's popped in the morning," he said, seeing the 8.5% series A preferreds trade to par and then above it, hitting a high of $25.21. "Then people started smacking bids down to where it is now."

The As (NYSE: ALLYPA) closed up 23 cents at $24.82 on volume of about 5.05 million shares. The preferreds traded as low as $24.23 before coming back up.

The 8.125% series B preferreds (NYSE: ALLYPB) meantime gained a penny, closing at $24.39, on volume of about 4.06 million shares.

The Bs traded as high as $24.85 and as low as $23.95. In both the As and Bs, the lows came shortly before lunchtime, and that sent the rumor mill into overdrive.

"There was a rumor that a large player sold a lot [of paper] into a very aggressive bid in the morning," the trader said. For the most part, the feeling is that the Ally preferreds are a "risk-off trade and that there is some real value here."

As previously reported, the market had already been speculating that the recent activity and declines in the name were due to a position being unwound by one large holder. There has been no other news in the Detroit-based bank to cause the gyrations.

Maiden deal comes at talk

Maiden Holdings North America priced a $100 million issue of 8.25% $25-par senior notes due June 2041 on Friday, according to a market source.

The company was expected to issue $75 million of the notes (BBB-).

The deal was first announced on Thursday, astonishing market players because of the less-than-stellar marketplace.

"It's not falling apart, but there's no bids out there," the source said.

He saw the paper offered at $24.50.

The Bermuda-based reinsurance subsidiary of Maiden Holdings Ltd. intends to use the proceeds to repay trust preferred securities.

The deal is the first U.S.-issued transaction for the company.

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