Preferreds trade up with equities; new issues trend toward par; Ally recovering lost ground

By Stephanie N. Rotondo

Portland, Ore., June 14 - The preferred stock market fared "not too bad actually," a trader said Tuesday.

"A lot of stuff is going ex-dividend," he added, as June is a hopping month for dividend payouts.

"People took their cues from the equity markets," said another trader, referring to the 123.14-point gain in the Dow Jones Industrial Average. "Preferreds are up for the most part," he said, especially "designer," or higher-dividend, names.

"There were a little more buyers back involved," the second trader added. "There hasn't really been mass selling, but there has been a buyers' strike." Many players were "waiting for opportunities," which have been few and far between in the current market.

Still, "I think we're getting into a better place," he said.

A third market source was also enthusiastic about Tuesday's preferred performance.

"It's nice to have a day that's mostly green for a change," he said.

There remained nothing on the new issue calendar, according to traders. However, recent deals, such as PartnerRe Ltd.'s 7.25% series E cumulative redeemable preferreds and Qwest Corp.'s 7.375% $25-par senior notes, continued to trade well.

After trading downward for most of last week, Ally Financial Inc.'s preferreds were seen heading back up, though there was no news to act as a catalyst.

"They have really turned a corner," a trader said.

Among other financials, MetLife Inc.'s series B preferreds made the day's most active list. However, a trader noted that most of the action was due to one large trade.

Banks were meantime little affected by news that the Federal Deposit Insurance Corp. repealed a rule that allowed big banks - Goldman Sachs, for example - to calculate their own ratios for capital coverage.

PartnerRe trends toward par

PartnerRe's 7.25% series E preferreds were seen trading around $24.90, one trader said.

Another trader said the deal was "trading well," quoting the issue at $24.92 bid, $24.94 offered.

The Pembroke, Bermuda-based reinsurance company priced the deal on June 8.

Meanwhile, Monroe, La.-based Qwest's 7.375% $25-par notes (NYSE: CTQ) were trading "around par," a trader reported.

The notes closed at $25.05, up 8 cents, on volume of about 463,500.

Ally attempts to rally

Ally Financial's series A and B preferreds attempted to recover some of the territory lost last week, though there was no news to help drive the shares upward.

The 8.5% series A preferreds (NYSE: ALLYPA) topped the day's most active list, with 2.26 million shares changing hands. The stock gained a dime to close at $25.25.

The 8.125% series Bs (NYSE: ALLYPB) meantime earned 11 cents, closing at $25.21. Volume, however, was much lower. About 576,000 shares turned over.

Last week, news outlets reported that the Detroit-based bank was delaying its planned initial public offering due to market conditions. The $5 billion to $7 billion IPO had originally been slated for later this month. The IPO would include stock held by the Treasury Department, which owns a 74% stake in the company.

Ally would not receive any of the proceeds from the stock sale.

All told, Ally took in $17.2 billion in government aid and has repaid nearly $5 billion via the sale of trust preferreds and from dividend payments.

MetLife trades in size

A market source said MetLife's 6.5% series B preferreds were the day's second most-actively traded $25-par issue, with about 848,000 shares trading.

"Most of that was one big trade," the source noted.

The preferreds (NYSE: METPB) gained a penny to finish at $25.05.

By comparison, the series A preferreds (NYSE: METPA) closed 2 cents lighter at $24.29, with just 31,000 shares moving around.

FDIC OKs capital floor rule

The FDIC voted Tuesday to approve a rule that would require banks of all sizes to adhere to the same guidelines in determining capital requirements.

According to a market source, in "2006-ish," the FDIC created a "formula that allowed larger banks to calculate their own ratios for capital."

"Talk about bad ideas," the source said.

In repealing the prior rule, larger banks now have to follow the same rules as their smaller counterparts.

"This was a good move," the source said, adding in the same breath that he generally did not approve of most of the rules the FDIC produced.

Still, the approval of the new rule - which is part of the Dodd-Frank Act - didn't have much affect on bank preferreds, which ended largely mixed.

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