PartnerRe brings upsized sale of 7.25% preferreds; CommonWealth slips; RBS bucks downward trend

By Stephanie N. Rotondo

Portland, Ore., June 8 - There was "lots of red on the screen," a preferred stock trader said Wednesday.

"It's a red day," said another market source. "There's not a lot that is green or yellow."

Pressure on the preferred market came from another day of declining equities as well as continued European concerns.

"There is just not a good market sentiment feeling right now," the source said.

The preferred marketplace did see a new issue pop up during the session. PartnerRe Ltd. announced a sale of series E cumulative redeemable preferreds early on in the day. The deal was then priced - and upsized - shortly before the market closed, according to a source.

In other new issues, CommonWealth REIT's recent issue of series E preferreds drifted lower as the company's chief financial officer addressed the audience at Nareit REITWeek in New York.

Elsewhere, investors pushed Royal Bank of Scotland plc's preferreds into higher territory. The gains came as the United Kingdom's banking regulator said it was planning to alter the rules to allow banks to repay government-based debt early.

Ally Financial Inc. meanwhile saw its preferreds take a beating, though there was no news to act as catalyst.

PartnerRe sells preferreds

PartnerRe, a Pembroke, Bermuda-based reinsurance company, brought $325 million of 7.25% series E cumulative redeemable preferred stock Wednesday.

The market had been expecting $150 million.

A market source said the new preferreds were trading around $24.90 in the gray market.

Proceeds from the sale will be used for general corporate purposes.

In an 8-K filed with the Securities and Exchange Commission on Tuesday, the company said it expected to post losses of $50 million to $70 million related to the recent Midwest tornado outbreaks.

CommonWealth falls

CommonWealth REIT's 7.25% series E preferreds traded down 3 cents to $24.74 (NYSE: CWHPE) as the company's chief financial officer presented at the Nareit REITWeek conference in New York.

At the conference, John Popeo, CFO, told the audience that the Newton, Mass.-based real estate investment firm had three funding options going forward, including the issuance of unsecured debt.

The other options were selling shares in the Government Properties Income Trust subsidiary and issuing common stock.

Pricing on 10-year unsecured debt is currently very attractive at "well under 6%," Popeo noted. He also mentioned significant gains to be harvested from its Government Properties Income Trust subsidiary shares but said it would be difficult to sell the entire block.

RBS hip-checks market trend

Royal Bank of Scotland preferreds bucked the day's generally negative trend, trading up in response to news that the United Kingdom was going to allow banks to repay their government bailout funds early, according to a market source.

The series M preferreds traded up 8 cents to $17.88 (NYSE: RBSPM) and were the day's most actively traded issue.

The series N preferreds meantime gained a dime to finish at $17.85 (NYSE: RBSPN).

The early repayment option will allow U.K.-based banks to lessen the degree of their dependence on taxpayer money. The option will also change the rules that were previously set out, implying that the banking industry is "clearly on the mend," according to George Osborne, Chancellor of the Exchequer.

"It is in everyone's interest that banks return to stability and that as they do they are able to lessen the amount that they depend upon the taxpayer," he said in a Wall Street Journal report.

However, if a bank does pay back the debt early, it will also have to pay a cancellation fee.

Ally takes a dive

Among other financials, Ally Financial's series A and B preferreds declined in heavy trading, a market source said.

However, he said he was "trying to figure out why they were down so much," as both issues lost at least three times more than the general market.

The 8.5% series A preferreds dove 34 cents to close at $25.76 (NYSE: ALLYPA), while the series B preferreds dropped 42 cents to $25.73 (NYSE: ALLYPB).

On average, the preferred market was down about a dime on the day, the source said.

Also, J.P. Morgan Chase & Co.'s series Z capital securities declined 14 cents to $25.75 (NYSE: JPMPZ).

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