Regions considers new issuance; Citigroup rises, Goldman slips; Ally preferreds firmer

By Stephanie N. Rotondo

Phoenix, Oct. 23 - The preferred stock market saw values dwindling Tuesday, as concerns about Europe and disappointing third-quarter earnings pressured the broader markets.

However, a market source said the market staged a comeback in the afternoon, leaving it "pretty flat" for the day.

No new issues were announced at the onset of the session, though Regions Financial Corp. did say in its third-quarter earnings release that it was considering entering the market should conditions remain favorable. If the Birmingham, Ala.-based bank does launch a new deal, proceeds will likely be used to redeem its 8.875% trust preferreds.

A source also noted that there was a rumor of a Bank of America Corp. deal floating around. But given the overall weakness of the day, he was not surprised that no deal came.

In recent deals, Triangle Capital Corp.'s $70 million issue of 6.375% $25-par senior notes due Dec. 15, 2022 officially listed on the New York Stock Exchange under the ticker symbol "TCCA."

Meanwhile, a trader said there was a story out that Ally Financial Inc. was preparing itself to be bought outright.

"If that happens, the preferreds would jump," the trader said.

Ally has inked a deal with Royal Bank of Canada, in which RBC will purchase Ally's Canadian operations.

Regions talks possible issue

Regions Financial issued a press release Tuesday announcing that it was considering a new issuance of preferreds.

The company said that any proceeds raised would be used for general corporate purposes, including the possible redemption of its 8.875% trust preferreds (NYSE: RFPZ).

"That leaves the outstanding $25-pars way overpriced," a market source said.

Others must have agreed, as the trust preferreds fell 16 cents to $25.66, versus the previous closing price of $25.82.

The TruPs don't become callable until June 15, 2013, but the prospectus underlying the securities allows for a redemption upon the occurrence of a regulatory capital treatment event.

Triangle lists on NYSE

Triangle Capital's recently priced 6.375% $25-par senior notes due Dec. 15, 2022 were admitted to the NYSE on Tuesday.

The deal priced Oct. 16. The symbol is "TCCA."

Paper was unchanged day over day, closing at $24.90.

Among other recent deals, Citigroup Inc.'s new $1.5 billion of 5.95% $1,000-par fixed-to-floating rate noncumulative preferreds - a deal that priced late Monday - were seen at 101.625 at midday.

After the market closed, a trader said at least $185 million of the paper changed hands, rising 1½ points to 102.125.

Another source quoted the issue at 102 bid, 102.25 offered. He also noted that the issue had freed to trade.

And, the Goldman Sachs Group Inc.'s recently priced 5.95% series I noncumulative perpetual preferreds continued to weaken, though it was again topping the day's most active list.

A source saw the preferreds falling 8 cents to $24.95.

Ally up on sale news

Ally Financial is selling its Canadian auto finance unit to RBC for $4.1 billion, a $620 million premium over book value.

A trader said that he had also heard that Ally was looking for a buyer of its core business, leaving him to speculate that such a transaction could be good for the preferreds.

The 8.125% fixed-to-floating trust preferreds (NYSE: ALLPA) rose 17 cents to $25.97, while the 8.5% fixed-to-floating rate perpetual preferreds (NYSE: ALLYPB) gained 4 cents to $25.19.

The sale to RBC is not the first Ally has done in the last week. On Thursday, the Detroit-based bank said it had agreed to sell ABA Seguros, a Mexican insurance subsidiary, to Switzerland-based ACE Group for $865 million.

General Motors Co. reportedly submitted bids for both units.

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