Preferreds slow to start week; Public Storage prices $200 million 5.2% cumulative issue

By Stephanie N. Rotondo

Phoenix, March 4 - A trader said the preferred stock market was on the quiet side as the week got underway.

"I thought we'd come back to a crazy market with this sequestration," he said. "But it's quiet."

However, he noted that several calls had been announced recently - "higher coupon stuff, which was to be expected" - which may mean a busy new issue calendar coming up.

One recently called issue, Credit Suisse AG's 7.9% tier I capital notes, even made the day's most active list.

In the primary, Public Storage brought a new deal on Monday, announcing an offering of series X cumulative preferreds. The issue came upsized at $200 million, pricing at par to yield 5.2%.

Price talk was around 5.25%, a trader said.

Credit Suisse busy

Credit Suisse's 7.9% tier I capital notes (NYSE: CRP) made the day's most active list on Monday, according to a market source.

He said the issue was flat, however, at $25.54.

On Feb. 20, the Zurich-based bank announced a redemption of the $1,525,000,000 issue for March 28.

The call price is $25.07132, which includes accrued interest.

Public Storage prices

Public Storage announced and then priced an offering of series X cumulative preferreds on Monday.

The deal was originally expected to be around $100 million but came upsized at $200 million.

Initial price talk was 5.25%.

"They'll probably tighten that up," a trader said ahead of pricing, seeing the issue trading around $24.75 in the midday gray market.

"It doesn't sound like they are going to have a selling group," he added.

The issue then came at 5.2%. The trader then quoted the securities at $24.70 bid, $24.85 offered.

Post-pricing, a source said the paper got as high as $24.85 bid, $24.95 offered but settled back in at $24.74 bid, $24.82 offered.

The source said the softness came after the deal was doubled and tightened.

Elsewhere in the Public Storage capital structure, the 6.35% series R cumulative preferreds (NYSE: PSAPR) were trading busily, but weaker.

The preferreds fell 4 cents to $27.09.

Given the Glendale, Calif.-based real estate investment trust's propensity to issue new deals in order to redeem other issues, a market source said it was possible the Rs were going to be call, but he doubted it. Instead, he posited that investors were swapping from one issue for the new deal.

New issues trade actively

Among other recent deals, Pitney Bowes Inc.'s recent $375 million sale of 6.7% $25-par notes due 2043 was pegged at $24.85 bid, par offered at midday.

After the close, a source said the issue was one of the more actively traded securities. Technically, he said the paper ended at $25.25, but noted that the volume weighted average price was $24.87.

The issue priced on Tuesday.

Meanwhile, Ventas Realty LP's new $225 million issue of 5.45% $25-par senior notes due 2043 - a deal that priced Thursday - was deemed up 50 cents from Friday's close at $25.20. However, a source noted that it was only up 14 cents from Friday's VWAP of $25.06, which he said was a more accurate price.

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