Montpelier Re breaks par; Ally As rally, Bs steady; Genworth hybrids gain despite poor numbers

By Stephanie N. Rotondo

Portland, Ore., May 4 - A trader said it was a "pretty good" day for preferred stocks Wednesday.

The midweek session saw Montpelier Re Holdings Ltd.'s new issue break to trade, and the deal quickly moved past par.

Meanwhile, after losing ground in the previous session on the back of "bad" earnings, Ally Financial Inc.'s series A preferreds bounced back up. Its series B preferreds, however, held steady.

Genworth Financial Inc. also released earnings late Tuesday. But come Wednesday, a trader was surprised to see the firm's hybrid capital securities trading upward.

Montpelier breaks par

A trader said Montpelier Re Holdings' new 8.875% perpetual noncumulative preferreds were "free to trade" and that the new issue "did very well."

He quoted the preferreds at $25.125 bid, $25.25 offered, compared with $24.90 in the gray market on Tuesday.

The Bermuda-based reinsurance company brought the upsized offering on Tuesday at par of $25.00. As previously reported, price talk was in the 9% area, and a trader opined that it would come in the "high-8s."

The market had also expected $75 million, or 3 million, of the preferreds to be sold, but the company actually issued $150 million, or 6 million preferreds.

On Wednesday, Standard & Poor's gave the new issue a BB+ rating.

Also in the new issue realm, Kayne Anderson MLP Investment Co. priced a $100 million issue of 4.95% series D mandatory redeemable preferreds.

A trader had previously speculated that the deal would come in the 5% area.

Ally series As bounce back

Ally Financial's 8.125% series A preferreds "rallied a bit," according to a trader.

"We saw some interest because there is a five-year lockout," he said. Because the preferreds were sold by the Department of the Treasury, they are exempt from the upcoming Dodd-Frank regulations, he explained.

The series As traded up 9 cents to $26.10, the trader said. The 8.5% series B preferreds meantime closed unchanged at $26.25.

The series As had fallen about a dime during the previous session following the Detroit-based bank's "bad" earnings release on Tuesday, the trader said.

Ally's first-quarter profit dropped nearly 10% to $146 million from $162 million the year before. The bank's automotive unit saw its income decline by 15%, while its mortgage unit took a 78% dive.

New consumer loans, however, climbed 25% over the previous quarter to $11.6 billion.

On Wednesday, Standard & Poor's upped its rating on Ally to B+ from B. The preferreds' rating was increased to CCC.

Ally is expected to launch an initial public offering some time before the end of the second quarter.

Genworth unfazed by numbers

Like Ally Financial, Richmond, Va.-based Genworth Financial posted its first-quarter results Tuesday and the numbers were not good.

However, a trader said the company's preferreds moved up, leading him to opine that "I guess you could say the bad news was already priced in."

Genworth's 6.15% hybrid notes due 2066 gained at least a point on the day to close at 78.125.

For the first quarter, Genworth reported net income of $82 million, or 17 cents per share. That compared with net income of $178 million, or 36 cents per share, the year before.

Citi, Susquehanna up

Among other financials, Citigroup Inc.'s 6% series Q trust preferreds were the day's most actively traded securities. About 2.42 million shares turned over.

The preferreds closed 26 cents higher at $22.86.

"People are interested in lower-coupon/lower-dollar price trust preferreds," a trader gave as the reason for the heavy volume.

Meanwhile, Susquehanna Bank's 9.375% series A preferreds came in as the third-most actively traded preferred on volume of just over 800,000 shares.

"That's weird," the trader said. "That never trades."

The shares closed up 23 cents at $26.85.

GE hybrids slip

General Electric Capital Corp. brought new five-year notes to market Wednesday, resulting in "some renewed focus" on the company's hybrid capital securities, according to a trader.

The 6.375% hybrids due 2067 fell half a point to 104.25.

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