Ally trading heavy, preferreds gain; Entergy released from syndicate; Public Storage firms

By Stephanie N. Rotondo

Portland, Ore., April 15 - The preferred stock market closed out Friday in the green, a market source said, though he noted that certain preferred stock indexes looked to be "fading" towards the end of business.

"In most cases, we were up 3 to 5 cents for the day," the source said.

Ally Financial Inc. was, by no surprise, one of the day's most actively traded names. Both the series A and B preferreds were better and a source opined it was due to "repositioning."

In new issues, Entergy Mississippi Inc.'s recent new deal "freed from the syndicate," according to a trader. However, the preferreds closed the day "pretty much unchanged."

In other news, a trader noted that Eagle Hospitality Properties Trust Inc. was an "interesting situation." The real estate investment trust's preferred holders recently secured the right to nominate two people to the company's board of directors, as stipulated in the terms of the security. The trader said that while most REITs have such a provision, "you rarely see preferred holders get the chance to [put people on the board]."

Allytrades up

Ally Financial's two series of preferred both traded up a nickel, according to a market source.

The series A 8.125% preferreds closed at $26, with about 1.6 million shares changing hands. The series B 8.5% preferreds ended the day at $25.50, on about 1.4 million shares trading.

Earlier in the week, the Detroit-based financial firm announced an exchange offer for its 7.5% senior guaranteed notes due 2020. Holders will receive new debt in place of the old paper.

When asked if that news had anything to do with the gains seen in Ally's preferreds, the source said no, adding that the increase was likely "just a repositioning of investors."

Entergy frees from syndicate

A trader said that Entergy Mississippi's new $150 million issue of $25-par 6% first-mortgage bonds due 2051 "freed from the syndicate" on Friday.

However, he called the notes "pretty much unchanged" at $24.60.

Another source said it was "a volatile day for them." He said the paper had closed at $24.53 in the previous session and was trading around $25 at the bell.

"They have been bouncing all around between $25.10 and $24.60," he said. "I don't know what conclusions you make about that."

The Jackson, Miss.-based energy producer priced the issue on Tuesday. The deal was upsized from $100 million.

Wells Fargo Securities LLC, Citigroup and Morgan Stanley & Co. Inc. are the joint bookrunners. Morgan Keegan & Co. Inc. and Stephens Inc. are the co-managers.

Funds from the sale will be used to help repay $480 million of 4.65% debt coming due in May and to redeem up to $75 million of the company's 6% debt due 2032.

Public Storage climbs

Public Storage's 6.5% series Q perpetual cumulative preferred stock traded up "a little bit" to $24.58, a trader said.

The issue, which priced on April 5, officially listed on the New York Stock Exchange on Thursday. The symbol is "PSAPRQ."

Eagle's unique 'situation'

Holders of Eagle Hospitality Properties' 8.25% series A cumulative redeemable preferred shares are getting a rare opportunity: the chance to nominate two members to the company's board of directors.

"It's an interesting situation," a trader said. The security agreement, he explained, contains a provision through which preferred holders can put members on the board in the event the company does not pay dividends for five consecutive years.

The last dividend paid out was in 2008, he said.

"A lot of REITs have these covenants in them," he said. "But this is the first time I've seen this played out. You rarely see where preferred holders get a chance."

Typically in such situations, he continued, companies would instead choose to redeem the preferreds.

But on April 12, the Purchase, N.Y.-based company held a meeting to vote on preferred holders' nominees Lauren Krueger and Martin J. Bienenstock. A vote was not held at that time because a quorum was not present.

The vote has been rescheduled for June 28.

The trader said he saw a $4 bid in over-the-counter trading, though he wasn't sure that was an accurate price.

"It could be worth $25; it would be whatever," he said.

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