Entergy Mississippi prices upsized issue; Ashford deal a no-show; Ally remains active, mixed

By Stephanie N. Rotondo

Portland, Ore., April 12 - A trader said it was a "mixed day" for the preferred stock market on Tuesday.

He said the marketplace was mostly weaker "but not by much," seeing a general decline of 15 basis points.

"It was such a mish-mash," he added.

Another trader said the market was "more or less unchanged on the day."

"There was very little block trading outside of the two Ally [Financial Inc. issues], two [Citigroup Inc.] and the Royal Bank of Scotland preferred complex," the second trader said.

"There seems to be some anticipation of some new bank/financial issuance in the sector," he added.

In new issues, Entergy Mississippi Inc. priced an upsized deal of 6% first mortgage bonds. A deal from Ashford Hospitality Trust Inc. had yet to price as of the close of business.

Entergy issue priced

Entergy Mississippi priced a $150 million issue of first mortgage bonds on Tuesday.

Chatter was that the company would sell $100 million, or 4 million notes, at par of $25.00. However, one market source said Monday that he expected the deal to grow.

The bonds (Baa1/A-) were priced at 6% and mature May 1, 2051.

A trader said the paper was trading at $24.74, unchanged from Monday's markets of $24.70 bid, $24.75 offered.

Proceeds will be used to repay $80 million of 4.65% debt that comes due in May and to redeem up to $75 million of 6% debt due 2032.

Entergy is based in Jackson, Miss.

Ashford yet to come

In other new issue news, Ashford Hospitality Trust's planned issue of series E cumulative preferred stock had not yet priced by the end of business Tuesday.

As previously reported, the deal was expected to come in around 8.875%.

A trader said the preferreds were trading at $24.60 in the gray market.

The Dallas-based real estate investment trust intends to use proceeds from the sale to pay down other debt and for a redemption of its series B-1 convertible preferreds.

Among other REIT new issues, Essex Property Trust Inc.'s new $65 million issue of 7.125% series H perpetual preferreds were given a BB+ rating by Standard & Poor's.

The agency said the rating reflects the company's slightly reduced dividend payout - the proceeds will be used to redeem its $80 million of series B preferred units.

A trader said there was a $24.75 bid in the street for the paper.

Ally remains busy

Away from new issues, Ally Financial's series A and B preferreds continued to dominate trading, according to market sources.

"Surprise, surprise," one source quipped.

He saw the 8.125% series A preferreds trade up a penny to $26.15, with about 1.2 million shares being traded. The 8.5% series B preferreds, however, fell 8 cents to $24.45, with 1.7 million shares turning over.

Another trader echoed those price levels.

Also active were Citigroup's series J preferreds, which closed at $26.27, according to the second trader.

RBS heads higher

Royal Bank of Scotland's preferreds continued to be active and better, traders said.

The preferreds have been gaining ground ever since a dividend-suspension program on some series of shares began on April 1. In an article published in Barron's on Saturday, market sources indicated the suspension could result in as much as 17% of gains for the preferred stock.

One market source said the 6.08% series G preferreds were the day's third most active issue, with some 120,000 shares changing hands. He called the shares 3 cents stronger at $15.97.

Another trader placed the 5.90% series E preferreds at $15.99, a gain of about a nickel on the day.

In 2009, RBS received state aid in return for an 85% stake in the firm. However, unlike other banks, RBS kept paying out dividends. This in turn upset the European Union Competition Committee, which ordered RBS to halt the payments.

April 1 was the beginning date for the two-year restriction on the series E, G and I preferreds.

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