Invesco prices; CommonWealth plans new issue; Black & Decker gains; Senior Housing falters

By Stephanie N. Rotondo

Phoenix, July 19 - More new issues flooded the preferred stock market Thursday, as Invesco Mortgage Capital Inc. priced an offering and CommonWealth REIT announced plans for new securities.

A trader said he had "not seen much trading" in either issue, though they appeared to be performing fine. He speculated that retail investors - which were reportedly taking a shine to the Invesco deal "because of the high coupon" - were taking a bit of a pause given all the new deals that have come so far this week.

The trader further commented that the calendar was expected to remain busy in the near term.

Meanwhile, Stanley Black & Decker Inc.'s new $750 million issue of 5.75% $25-par junior subordinated notes due July 25, 2052 "took off this morning," a trader said. The paper freed from the syndicate on Thursday.

Royal Bank of Scotland Group plc preferreds again dominated trading in the secondary arena.

"There was a lot of RBS trading," a market source said.

However, after moving up steadily over the last week or so, the preferreds began to slide in Thursday trading.

"They were largely off," the source said.

Overall, the preferred market ended the session "pretty flat on the day, pretty mixed," according to a market source. "Most of the day it was actually up." He added that the stocks were trading "in a very narrow range."

Invesco brings deal

Invesco priced $135 million of 7.75% series A cumulative redeemable perpetual preferreds after the close.

The deal was upsized from $100 million, and pricing was in line with talk.

There is a $20.25 million over-allotment option.

Ahead of pricing, a trader said he had not seen any street markets for the paper.

Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners. JMP Securities, Keefe, Bruyette & Woods and Mitsubishi UFJ Securities LLC are the co-managers.

The preferreds can be redeemed on or after July 26, 2017 or in the event of a change of control.

Invesco will apply to list the new securities on the New York Stock Exchange under the symbol "IVRPA." Settlement is expected July 26.

Proceeds will be used to purchase agency residential mortgage-backed securities, non-agency RMBS, commercial mortgage-backed securities and certain residential and commercial mortgage loans.

CommonWealth to price

CommonWealth REIT meantime announced plans to sell at least $150 million of $25-par senior notes due 2042. They are talked at 5.75% to 5.875%.

The notes were seen at $24.63 bid, with no offers, in the gray market, a trader said.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS and Wells Fargo are the joint bookrunning managers. The joint lead managers are Jefferies & Co. Inc. and RBC Capital Markets LLC.

Proceeds will be used to repay outstanding amounts under a revolving credit facility and for general corporate purposes, which may include future acquisitions.

After paying down the credit facility, the company intends to use the available borrowings to redeem some or all of its outstanding 7.125% series C cumulative redeemable preferreds.

Black & Decker zooms

Black & Decker's new $750 million of 5.75% $25-par junior subordinated notes due July 25, 2052 were seen hitting a high of $25.30 before "leveling off" to $25.27 bid at midday, a trader said.

After the market closed, a market source said the deal was not only the day's "biggest gainer," but it was also the most actively traded security of the day.

The source said the paper closed at $25.32, which was up 36 cents. The volume-weighted average price was $25.24, "quite indicative of where it was most of the day."

The source added that the notes freed to trade around 9 a.m. ET on Thursday.

The deal priced Wednesday and came upsized from $200 million.

Senior Housing fares poorly

While Black & Decker's new deal performed well, Senior Housing Properties Trust's $350 million issue of 5.625% $25-par senior notes due Aug. 1, 2042 did not, a trader said.

The deal priced Tuesday and freed up Wednesday.

The trader saw the notes at $24.52 at midday, while another source pegged the issue at $24.32 after the bell.

The closing price was down 68 cents day over day, the source said.

"Ouch," he said.

The Newton, Mass.-based real estate investment trust will apply to list the notes on the New York Stock Exchange. Settlement is expected Friday.

Bank of America Merrill Lynch, Citigroup, UBS and Wells Fargo are the joint bookrunning managers. The joint lead managers are Jefferies and RBC.

Proceeds will be used to prepay the variable portion of a Federal National Mortgage Association secured term loan, to repay amounts outstanding under a revolving credit facility and for general business purposes, which may include funding possible future acquisitions of properties.

RBS gains halted

There continued to be heavy activity in Royal Bank of Scotland preferreds, but the securities began to decline after a week or so of steady gains.

"Things are getting tighter," a market source said. "We still don't think they are where they should be. There's still room to move."

He opined that the day's dip could have been due, at least in part, to profit taking.

The 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) dropped 9 cents to $20.00, as the 6.75% series Q preferreds (NYSE: RBSPQ) fell 6 cents to $20.36.

The 7.25% series T preferreds (NYSE: RBSPT) declined 28 cents, or 1.26%, to $22.00.

RBS is based in Edinburgh.

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