Preferreds steady as volume improves; Ally declines amid CEO exit; Triangle Capital on tap

By Stephanie N. Rotondo

Phoenix, Feb. 3 – The preferred stock market was holding its own as Australia unexpectedly cut its interest rates and Germany’s 10-year bond yields fell below Japan’s for the first time.

The market also held in there as Standard & Poor’s cut the rating of several European banks due to new legislation enacted by the European Union regarding government support.

“It was a non-event [in the preferred space] because that type of ratings approach was factored in years ago,” one market source said.

The Wells Fargo Hybrid and Preferred Securities index ended up 1 basis point.

Though the overall market was little changed on the day, a source said that the most actively traded issues all ended weaker.

Still, he noted that volume experienced a “dramatic improvement.”

Morgan Stanley & Co. Inc.’s 6.375% series I fixed-to-floating rate noncumulative preferreds (NYSE: MSPI) ended down 4 cents at $26.04, with nearly 1.4 million shares being exchanged. Bank of America Corp.’s 6.5% series Y noncumulative preferreds (NYSE: BACPY) meanwhile dipped a penny to $25.30, on about 1.09 million shares trading.

Regions Financial Corp.’s 6.375% series B fixed-to-floating rate noncumulative preferreds (NYSE: RFPB) were also busy, closing 7 cents softer at $25.13. And, Citigroup Inc.’s 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) drifted down 2 cents to $26.48.

Ally CEO steps down

Ally Financial Inc.’s 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPA) were also among the day’s most actively traded issues as investors reacted to news of a new chief executive officer.

The preferreds finished the day at $26.29, down 3 cents. The 8.5% series A fixed-to-floating rate perpetual preferreds (NYSE: ALLYPB) fell 16 cents to $26.23.

The Detroit-based lender said in a statement late Monday that Jeffrey J. Brown was succeeding Michael A Carpenter as CEO, effective immediately. In the statement, Carpenter asserted that it was “the right time” for him to step down from his role, given that under his watch, the company completed its initial public offering and repaid the bailout funds received under the Troubled Asset Relief Program.

However, a market source said the news was “a little bit of a surprise,” as the company gave no hint of Carpenter’s exit in its earnings call last week.

Triangle selling baby bonds

The primary preferred stock market added a deal to the pipeline Tuesday, inciting hope that more deals from other issuers could be on the horizon.

Triangle Capital Corp. said it was offering $50 million of $25-par notes due 2022, with price talk in a 6.375% to 6.5% range, according to a trader.

The trader saw a gray market quote of $24.55 bid early in the session.

Keefe Bruyette & Woods Inc., Raymond James & Co., BB&T Capital Markets and Janney Montgomery Scott LLC are running the books on the deal.

Proceeds will be used for investments, working capital and general corporate purposes.

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