The Treasury Department may sell as much as $2.5 billion of Ally Financial Inc. trust-preferred securities this month as it looks to recoup bailout funds for taxpayers, said a person with direct knowledge of the plan.
The Treasury will look to sell at least $1 billion of the securities to investors in January or "shortly after" fourth-quarter earnings are announced in February, said the person, who asked not be named because the plans are private. Timing of a sale depends on the state of capital markets, the person said.
The Federal Reserve is likely to rule that the securities can continue to count as Tier 1 capital, making them more attractive to investors, the person said. The Treasury holds $2.67 billion in Trups issued by Detroit-based Ally.
The auto and home lender, which benefited from a $17.2 billion taxpayer bailout, moved closer to regaining its independence last week as the government converted $5.5 billion of preferred stock into common shares. The Treasury said Dec. 30 that it would begin selling the Trups with Ally's help "as soon as practical." Gina Proia, an Ally spokeswoman, declined to comment.