Preferreds end week on high note; trading still thin; Ally, Telephone & Data holding steady

By Stephanie N. Rotondo

Portland, Ore., March 25 - Trading in the preferred stock market remained subdued Friday, what with a lack of new issues and driving news.

"Until there is a new deal, nothing is going to bounce around much," a trader said, opining that the market will likely remain "dead" for at least the next two weeks.

Still, he expressed hope that the new issue market will ramp up once financial institutions figure out what the Frank-Dodd bill will mean and how they should structure deals accordingly.

Of the week's new deals, Ally Financial Inc.'s $1.02 billion issue of 8.5% perpetual preferreds, traded back down Friday after gaining a bit of ground on Thursday. The 8.125% hybrid trust preferreds were meantime hanging in the same range they were seen in the previous session.

Telephone & Data Systems Inc.'s new deal - a $300 million issue of 7% $25-par notes due 2060, priced Monday - was also hanging around the same level it has been at all week. A trader said the preferred shares might trade up once officially listed, which is expected to happen in the coming week.

Preferred market indicators up

Overall, the preferred market was generally up, as evidenced by the PowerShares Financial Preferred Portfolio fund (NYSE Arca: PGF) and the PowerShares Preferred Portfolio fund (NYSE Arca: PGX). The PGF closed up a penny at $18.06, while the PGX traded up 2 cents to $14.28.

The iShares S&P U.S. Preferred Stock index fund (NYSE Arca: PFF) was also up, gaining 6 cents to close at $39.53.

Ally issues steady

Ally Financial's 8.5% non-cumulative perpetual preferreds - the $1.02 billion issue sold this week by General Motors Co. - traded down to $24.90, according to a trader.

However, the 8.125% hybrid trust preferreds - a $2.67 billion issue sold by the U.S. Department of the Treasury on March 2 - were "doing well," the trader said. He quoted them at $25.40 bid, $25.50 offered, about unchanged.

Another trader pegged the 8.5% preferreds at $24.92 bid, par offered, also about unchanged.

Ally Financial is a Detroit-based bank holding company.

Telephone & Data still hanging

Chicago-based Telephone & Data Systems saw its 7% $25-par notes holding steady around $24.80, a trader said.

The notes have been trading at that level since being priced on Monday.

But the trader opined that once the preferreds are listed on the New York Stock Exchange, they might trade upward.

He added that he believes the shares are expected to being trading on Monday under the ticker symbol "TDJ."

Citi, BofA slip

Among financials, Citigroup Inc.'s 8.5% preferreds traded down 40 cents to $26.406, a market source said.

The issue was the day's most actively traded security.

Bank of America Corp.'s series E floating-rate preferreds - the day's second most active issue - also traded down, losing 8 cents to close at $19.12.

No redemption for Wachovia

A market source said that one of the most interesting things to occur over the week was what didn't happen.

Specifically, he pointed to an expected redemption of Wachovia Corp.'s 5.8% $1,000 par securities.

"They had rallied a few weeks ago," the source said, on expectations they would be called. As they have not been redeemed, he speculated that prices should soften.

He said the notes were trading around 91, down 2 points on the day. However, he added that they have been trading in a 91 to 93 range since February, when the notes were remarketed.

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