Preferred market stalls ahead of Fed comments, rallies after; Ally paper up despite loss

By Stephanie N. Rotondo

Phoenix, July 31 - The preferred stock market was muted as the month came to an end, a trader said Wednesday.

"The secondary is off with the bond market," he noted. He also said that he had not heard of any new issues expected in the coming weeks.

The subdued tone was likely because investors were waiting to see what occurred at a Federal Open Market Committee meeting held this week. Just after midday, the central bank made a statement in which it said it was maintaining its current monetary policy.

"It was not a big activity day," a market source said of the session. "People were waiting for the Fed."

Leading up to the Fed's statement, the preferred space was mostly weaker, though just before the announcement things started to pick up, the source said.

The market ended the day with a positive tone.

Of recently priced deals, Costamare Inc.'s $50 million of 7.625% series B cumulative redeemable preferreds - a deal that priced Tuesday - were seen at $24.60 bid, $24.72 offered.

"Nobody is really trading it," a trader said. "I'm sure it's a manager there at [$24.60]."

Zions Bancorporation's series A fixed-to-floating rate noncumulative preferreds (NYSE: ZBPA) meantime were down 95 cents, or 4.22%, at midday at $21.55.

At the close, the preferreds were off $1.01, or 4.49%, at $21.49.

The Salt Lake City-based bank held an online auction that ended on Tuesday. The company sold an additional $5.9 million of the preferreds at a price of $21.55.

The price was a 4.2% discount to Tuesday's closing share price of $22.50.

Zions will use proceeds to partially fund a redemption of the 9.5% series C noncumulative perpetual preferreds.

Ally rises, PS Business dips

Ally Financial Inc.'s 8.5% series A fixed-to-floating rate perpetual preferreds (NYSE: ALLYPB) rose 6 cents to $26.14 as the bank released its quarterly figures.

Ally posted a wider loss for the second quarter due to a charge from its recent $2.1 billion settlement with bankrupt Residential Capital LLC and its creditors.

Net loss was $927 million. That compared to a loss of $898 million the year before.

PS Business Parks Inc. meantime reported earnings on Monday and held a conference call to discuss those results on Tuesday.

Come Wednesday, the 6% series T cumulative preferreds (NYSE: PSBPT) were trading off by 20 cents at $23.17.

The Glendale, Calif.-based real estate investment trust had profits of $38 million, or $1.19 per share, for the second quarter. For the same quarter of 2011, profit was $37.3 million, or $1.18 per share.

Revenues gained 2.7% to $87.9 million.

However, earnings came in just below analysts expectations. Analysts polled by Thomson Financial were forecasting an average of $1.21 per share.

Revenues were on the nose versus analysts' projections.

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