M&T Bank to issue preferreds, repay TARP; Ally dips as dividend paid; Citi slips, RBS gains

By Stephanie N. Rotondo

Portland, Ore., April 27 - The preferred stock market was mostly mixed Wednesday, though more toward the positive side, according to a market source.

Still, total trading in the preferred space was well below Tuesday's levels. Nearly $480 million face value of preferreds changed hands, compared with about $722 million on Tuesday.

"I was hoping we'd see some action with the Fed doing nothing," a trader said, referring to the Federal Reserve's decision to maintain its course after its two-day meeting.

The trader also noted that many preferred investors are looking to buy securities that are to be called or mature in 2013, when the Frank-Dodd bill becomes effective.

"But we don't expect anything much to happen for the next quarter or so because everyone is still trying to figure out what will go on with the new financial regulations," he said.

That being said, he also remarked that he heard rumors of new issues that are coming in the next month.

"At least when we weren't getting new deals, we had volatility," he said. "Now there's no volatility and no new issues."

Of the day's goings-on, M&T Bank Corp. announced that it plans to sell $500 million of perpetual preferred stock to supplement its tier 1 capital. Additionally, the company said it intends to repay $700 million of Troubled Asset Relief Program funds by the end of the second quarter.

Also, Ally Financial Inc.'s series B preferreds fell a bit after the company paid a partial dividend on the securities. The preferreds had risen a dime on Tuesday, causing one trader to speculate that investors were "buying the dividend."

M&T planning new issue

M&T Bank said it is planning on selling $500 million of perpetual preferreds before the end of the second quarter. On the news, a trader said the bank's outstanding preferred stock "should have dropped significantly, but it's not."

He called the 8.5% series A preferreds due 2068 4 cents better at $27.08 shortly before the market closed.

At another shop, a source saw the preferreds ending 9 cents higher at $27.14.

M&T also intends to redeem $330 million of preferreds held by the U.S. Department of Treasury that was issued by Wilmington Trust Corp. - which the bank plans to acquire soon - and $370 million of preferreds issued to the Treasury by M&T and Provident Bankshares Corp.

A trader speculated that the new preferreds would likely be priced around 8%.

M&T is a Buffalo-based bank.

Ally off on dividend

Ally Financial's 8.5% series B preferreds traded down after the Detroit-based bank paid a partial dividend on the paper, according to a trader.

Before the market closed, the trader said the preferreds were down 14 cents at $25.90. However, he noted that with the partial dividend of 29.5 cents per share, the preferreds were actually up 15 cents from Tuesday levels.

The preferreds had gained a dime in Tuesday trading as investors were "buying the dividend," he said.

Another market source saw the shares falling 16 cents to close at $25.88.

The trader said about 1.136 million shares changed hands.

Citi slips, RBS gains

Also active in Preferredland was Citigroup Inc.'s 8.5% series J preferreds, which fell 8 cents to $26.63.

Royal Bank of Scotland Group plc's series G preferreds meantime rose 9 cents to finish at $15.72.

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