BGC's new deal lackluster; Corporate Office at par; heavy demand seen for Qwest's 7% notes

By Stephanie N. Rotondo

Phoenix, June 21 - Preferred stocks fared better than straight equities on Thursday, according to a trader.

"Everything was trading up. Everything is doing very well," he said.

In the primary market, BGC Partners Inc. priced a $100 million offering of $25-par 30-year senior notes. Unlike Corporate Office Properties Trust - a deal that priced Wednesday - BGC was "kind of lagging," a trader said.

Qwest Corp.'s recent $400 million issue of 7% $25-par 40-year notes meantime continued to perform well despite not yet listing. However, a trader noted that the notes came in at the end of the day.

Recently redeemed issues from banks like Citigroup Inc., KeyCorp and BB&T Corp. dominated secondary market activity, with mixed results.

BGC prices, fizzles

BGC Partners priced $100 million of 8.125% $25-par senior notes due June 15, 2042.

Price talk was 8.125% to 8.25%, according to the trader. The deal was upsized from $50 million.

A trader saw paper "locked" at $24.62 in the gray market at midday.

After the bell - and post-pricing - a trader said the deal was "kind of lagging" at $24.60.

The company has applied to list the notes on the New York Stock Exchange under the ticker symbol "BGCA." Settlement is expected Tuesday.

Wells Fargo Securities LLC is the bookrunning manager. Cantor Fitzgerald & Co., Raymond James & Associates Inc. and RBC Capital Markets LLC are the co-managers.

Proceeds will be used to repay short-term borrowings under an unsecured revolving credit facility and for general corporate purposes.

BGC is a New York-based brokerage company primarily servicing the wholesale financial and property markets.

Corporate Office hits par

Corporate Office Properties Trust's $150 million offering of 7.375% series L cumulative perpetual preferred shares was already trading at par, according to the trader. The deal priced Wednesday.

"The deal is in very good shape," a trader said. "A lot of institutional and retail demand for that name."

He quoted the preferreds at $24.95 bid, $25.02 offered.

The Columbia, Md.-based real estate investment trust will apply to list the preferred shares on the NYSE under the ticker symbol "OFCPL." Settlement is expected June 27.

Wells Fargo and Bank of America Merrill Lynch are the joint bookrunning managers. Citigroup Global Markets Inc., KeyBanc Capital Markets Inc. and Raymond James are the senior co-managers. BB&T Capital Markets, Capital One Southcoast Inc., Mitsubishi UFJ Securities (USA) Inc., PNC Capital Markets LLC and RBS Securities Inc. are the junior co-managers.

Proceeds will be contributed to the REIT's operating partnership, which will use the funds to pay down its unsecured revolving credit facility and for general corporate purposes, including potential future full or partial repurchases or redemptions of its outstanding preferreds.

Big demand for Qwest

A trader said there continued to be "a lot of demand" for Qwest's 7% notes due 2052.

Though he said that paper was trading well, he noted that markets "came back in at the end of day," quoting the notes at $25.20 bid, $25.30 offered.

Earlier in the day, a trader had pegged the securities at $25.35.

The deal priced June 14 and has yet to list on the NYSE.

Qwest is a Monroe, La.-based telecommunications provider.

Called issues active, mixed

Recently called issues from banks like Citigroup, KeyCorp and BB&T have been dominating secondary market activity of late.

The redemptions began after the Federal Reserve released its new proposed rules on regulatory capital treatment. Under the rules, certain trust preferred securities will no longer be considered tier 1 capital. Calling the proposal a "regulatory capital treatment event," banks have called for the early redemption of about $20 billion of trust preferreds.

Citigroup was one of the first to jump on board, calling $4.9 billion of TRUPs on June 8. On June 12, KeyCorp called $707.19 million, and BB&T followed on June 18, calling $3.1 billion of TRUPs.

Since the calls, the issues have consistently been among the day's most actively traded securities.

On Thursday, that was no different, though the TRUPs finished the session mixed.

KeyCorp's 8% enhanced TRUPs (NYSE: KEYPF) ended flat at $25.12. BB&T's 8.95% enhanced TRUPs (NYSE: BBTPA) slipped 3 cents to $25.19, while the 9.6% enhanced TRUPs (NYSE: BBTPB) were seen around $25.49, up a cent.

Citi's 8.5% fixed-to-floating TRUPs (NYSE: CPJ) meantime closed flat at $25.59.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.