Entertainment Properties brings $125 million; Bank of America redemption deemed 'big news'

By Stephanie N. Rotondo

Phoenix, Oct. 4 - It was "another day, another deal" in the preferred stock market, a trader said Thursday. Entertainment Properties Trust launched a sale of at least $75 million series F cumulative redeemable perpetual preferreds.

The deal came after the end of business at $125 million with a 6.625% dividend.

In the secondary space, Bank of America Corp. announced that it will redeem $5.13 billion of trust preferreds in early November. A trader said all the called issues had been halted.

"They were around par anyway," he said.

He explained that by halting trading in the called securities, investors who had bought the respective issues were protected. He noted that when General Electric Capital Corp. announced its new deal and said the proceeds would be used to call another issue, the paper was not halted ahead of time and the securities lost a sizeable chunk of value.

The redemption of the Bank of America securities is meantime being touted as a positive for the bank. The company said it expects to post a $100 million pre-tax charge in the fourth quarter due to the call, but that interest expense cost savings would be $50 million for the remainder of 2012 and about $300 million in 2013.

"Obviously, that's big news," a market source said.

Overall, "the tone was pretty firm" on Thursday, according to a source. Liquidity was also decent, he said.

"There was a slow steady climb for most of the day," he said.

Entertainment Properties prices

Entertainment Properties brought $125 million of 6.625% series F cumulative redeemable perpetual preferred stock after the bell on Thursday.

A trader saw the issue offered at $24.70 in the gray market as of midday.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and RBC Capital Markets LLC are the joint bookrunning managers. The joint lead managers are Barclays and KeyBanc Capital Markets Inc.

The Kansas City, Mo.-based real estate investment trust will use proceeds to redeem its 7.375% series D cumulative redeemable preferreds for a total redemption price of $115.8 million. Remaining funds will be used for general corporate purposes, including the acquisition, development or financing of properties.

The series D preferreds (NYSE: EPRPD) fell 3 cents to $25.07.

Recent deals doing well

In recent deals, GE Capital's $825 million of 4.875% $25-par senior notes due 2052 - a deal that priced late Tuesday - moved up to trade at $24.80.

Aflac Inc.'s 5.5% $25-par subordinated debentures due 2052 (NYSE: AFSD) were among the day's most actively traded issues, rising 15 cents to $25.25.

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