Market attempts to rebound; no word on Reinsurance Group's pulled deal; Ally gets equity

By Stephanie N. Rotondo

Phoenix, Aug. 20 - The secondary preferred stock market was "slightly green, for once," a trader said Tuesday.

Another market source noted that the Wells Fargo Hybrid and Preferred Securities index was up 74 basis points, or about 18.5 cents on average for $25-par issues.

"Liquidity was definitely improved over the last few days," the source remarked, though he added that 'I wouldn't say it was gangbusters."

As for the primary, he said the market was still focusing on news from Monday regarding the postponement of Reinsurance Group of America Inc.'s $300 million offering of $1,000-par fixed-to-floating rate subordinated debentures due 2053.

Market sources attributed the postponement to poor market conditions. Price talk was 7% to 7.125%, which one source deemed as "pretty attractive" after the deal was first announced on Monday.

One trader said he had not heard how long the deal would be shelved, though he opined "I think we're going to be pretty dead for the week."

Ally issues new equity

Ally Financial Inc. said Tuesday that it had negotiated a $1 billion private placement of common stock with a group of unnamed investors.

The news, combined with a report that the company intends to buy back some of its TARP preferreds from the Treasury Department for $5.2 billion, helped the preferreds inch higher during Tuesday's session.

The 8.125% series 2 fixed-to-floating rate trust preferreds (NYSE: ALLYPA) increased 8 cents to $26.03. A market source said that equaled a yield of 6.43%.

"If any company needs new equity, it's them," the source said. In March, the Federal Reserve labeled the former financing arm of General Motors Co. the worst capitalized bank out of the top 18.

Meanwhile, the 8.5% series A fixed-to-floating rate perpetual preferreds (NYSE: ALLYPB) put on 16 cents, closing at $26.51, yielding 6.15%.

Ally sold 166,667 shares in the private placement.

In addition to the $5.2 billion payment to taxpayers, Ally is also paying $725 million to the Treasury in order to cancel the right the agency previously had to receive extra payments should the common stock fall below a certain price.

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