Bank preferreds firmer despite forex settlement; Ally wraps tender offer; Diana upsized

By Stephanie N. Rotondo

Phoenix, May 21 – The preferred stock market firmed up Thursday, but a trader noted that things were starting to quiet down ahead of the Memorial Day weekend.

The Wells Fargo Hybrid and Preferred Securities index ended 18 basis points higher for the day. The index was up 11 bps at mid-morning.

In secondary trading, bank preferreds were holding up despite news out late Wednesday regarding a foreign exchange probe.

Four banks – Citigroup Inc., JPMorgan Chase & Co., Barclays plc and Royal Bank of Scotland Group plc – pleaded guilty to manipulating forex markets. UBS pleaded guilty to a different change, while Bank of America Corp. avoided a guilty plea.

However, all six banks were levied a fine – for a total of almost $6 billion.

Investors might have been reacting positively to the news, as the banks now have another legal battle behind them.

Citi’s 5.8% series C noncumulative preferreds (NYSE: CPC) rose 19 cents to $25.21, while the 6.875% series K fixed-to-floating rate noncumulative preferreds (NYSE: CPK) improved a dime to $26.93.

In JPMorgan securities, the 6.125% series Y noncumulative preferreds (NYSE: JPMPF) increased 2 cents to $25.21. The 5.45% series P noncumulative preferreds (NYSE: JPMPA) were 14 cents better at $24.08.

Barclays meantime saw its 8.125% series 5 noncumulative callable dollar preference shares (NYSE: BCSPD) rising 8 cents to $26.30.

RBS’ 6.08% noncumulative guaranteed trust preferred securities (NYSE: RBSPG) were up a like amount at $24.98.

Rounding out the group, Bank of America’s 6.62% series W noncumulative preferreds (NYSE: BACPW) were up 6 cents at $25.72. But its 6.5% series Y noncumulative preferreds (NYSE: BACPY) dropped 2 cents to $25.73.

Ally wraps tender

Also in the financial realm, Ally Financial Inc. announced that it had completed a tender offer for 13 million outstanding shares of its 8.5% series A fixed-to-floating rate perpetual preferreds.

The former financing arm of General Motors said on April 20 that it would repurchase the shares at $26.65. The offer expired on Wednesday.

Over 22 million shares were validly tendered, but only 13 million were taken on a pro rated basis. All told, the company will pay $346.45 million for the preferreds, which represent about 31.8% of the total amount outstanding.

As for the remaining outstanding shares (NYSE: ALLYPB), they finished the day down 8 cents at $26.37.

Ally is based in Detroit.

Diana deal upsized

Diana Shipping Inc. announced late Wednesday that it had priced $55 million of 8.5% senior unsecured notes due 2020.

The deal came at the tight end of talk and upsized from $40 million.

Come Thursday morning, a trader pegged the issue at $24.75.

He added that the notes had not yet freed to trade.

Stifel Nicolaus & Co. Inc., Deutsche Bank Securities Inc., Janney Montgomery Scott LLC, BB&T Capital Markets and Wunderlich Securities Inc. ran the books.

As for the company’s 8.875% series B cumulative redeemable perpetual preferreds (NYSE: DSXPB), those regained ground Thursday, closing up 37 cents, or 1.5%, to $24.97.

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