Kilroy Realty prices preferreds; Horizon Technology brings upsized deal; Ally paper firms

By Stephanie N. Rotondo

Portland, Ore., March 16 - Preferred stocks rose modestly in Friday trading, and volume was "moderate," according to a market source.

Two new issues were priced Friday, one from Kilroy Realty Corp. and one from Horizon Technology Finance Corp. There wasn't much going on in the latter deal, but the former was trading at levels near par in the gray market.

Meanwhile, Ally Financial Inc. inched upward following reports that Fortress Investment Group LLC was looking at paying $1 billion or more for certain assets of the company's money-losing Residential Capital LLC unit.

Kilroy preferreds price

Kilroy Realty announced a sale of $100 million of 6.875% series G cumulative redeemable preferred stock.

The deal was originally announced Thursday and came at the low end of price talk. There is a $15 million over-allotment option.

A trader saw the paper offered at $24.90 in the gray market shortly before the end of business.

The company will apply to list the new preferreds on the New York Stock Exchange. Settlement is expected March 27.

Wells Fargo Securities LLC, Bank of America Merrill Lynch, Barclays Capital Inc. and J.P. Morgan Securities LLC are the bookrunners.

Proceeds will be used to redeem all of the company's 7.8% series E cumulative redeemable preferreds and for general corporate purposes, including the possible redemption of the 7.5% series F cumulative redeemable preferreds, acquiring properties and the repayment of outstanding debt.

Kilroy is a Los Angeles-based real estate investment trust.

Horizon brings upsized deal

Horizon Technology Finance brought an upsized offering of 7.375% $25-par senior notes due March 15, 2019, the business development company said in a press release out Friday.

The company priced $30 million of the baby bonds. There is a $4.5 million over-allotment option.

The deal was originally announced Monday, and only $25 million of the notes were expected to be sold.

Horizon will apply to list the notes on the New York Stock Exchange. Settlement is expected March 23.

Stifel, Nicolaus & Co. Inc. is the bookrunner. BB&T Capital Markets and Sterne Agee & Leach Inc. are the co-lead managers, and Wunderlich Securities Inc. is the co-manager.

Proceeds will be used for investments in portfolio companies in accordance with the company's investment objective and strategies and for working capital and general corporate purposes.

Horizon is a Farmington, Conn.-based externally managed, closed-end, non-diversified management investment company.

Ally firms on ResCap rumors

In the secondary market, Ally Financial's preferreds firmed on rumors that Fortress Investment Group is interested in certain assets of Residential Capital.

The sale is expected to bring in $1 billion or more and will be facilitated via a bankruptcy filing of the mortgage lender.

Ally's 8.125% fixed-to-floating preferreds (NYSE: ALLYPA) were among the day's most actively traded securities, gaining 3 cents to close at $23.64.

The 8.5% trust preferreds (NYSE: ALLYPB) were not nearly as active, but they were better nonetheless. The trust preferreds rose a nickel to $22.27.

The Fortress news was reported late Thursday. Reports indicated that ResCap, in preparation for a Chapter 11 filing, was already shopping for up to $2 billion of loans to fund operations.

A sale of the mortgage lender's assets would also be a boon to Ally as it seeks to repay more than $17 billion of government bailout funds. Earlier in the week, Ally's capital plan was rejected by the Federal Reserve, making the Detroit-based bank one of four banks to fail the stress test.

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