CommonWealth's upsized deal expected to do well; Endurance dips as investors 'swap' paper

By Stephanie N. Rotondo

Portland, Ore., May 26 - Some preferred market players elected to get a head start on the three-day holiday weekend, which resulted in a lackluster day for preferred stocks on Thursday.

"Everybody has left for the weekend," lamented one trader who was still stuck at his desk. With no one around, it was harder to get things done and, as a result, many issues were pressured.

Another trader remarked that there was a "late-day sell-off" that weighed on the market.

Despite the empty desks and weaker marketplace, CommonWealth REIT priced an issue of series E cumulative redeemable perpetual preferreds. The deal was upsized to $250 million from $150 million, and the dividend came in below price talk.

"That will piss everybody off," said one trader. "They ramped up the size and dropped the coupon a quarter-point when nobody is around."

Meanwhile, Endurance Specialty Holdings Ltd.'s 7.5% non-cumulative series B perpetual preferreds from Tuesday dipped some, leaving a trader to opine that accounts were getting out of Endurance to buy CommonWealth.

On Wednesday, Fifth Third Bancorp announced that it would provide relief for those who bought or sold its 8.875% series C trust preferreds between May 16 and May 18. A spike in trading volume ahead of a redemption announcement led some to cry foul, and the Securities and Exchange Commission is reportedly investigating the matter.

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