New issues from Raymond James, Health Care REIT 'en fuego'; RBS preferreds take over secondary

By Stephanie N. Rotondo

Portland, Ore., March 1 - The first trading day of the month was a busy one for preferred stocks, though generally the market was sideways, a market source said.

"We opened strong and then faded through the afternoon," he said.

A good portion of the activity was centered on the primary market. New issues from Raymond James Financial Inc. and Health Care REIT Inc. were "en fuego," the source said, noting that the phrase is not actually proper Spanish.

"Those were two pretty well underwritten deals," he added. Both issues priced late Wednesday and were already performing well as of the previous session's close. The new deals only gained strength come Thursday.

In the secondary, Royal Bank of Scotland Group plc was again attracting some attention. At least two series of its preferreds had volume over 1 million shares in Thursday trading - both of them issues that are expected to begin paying dividends as soon as possible.

Raymond issue flies higher

Late Wednesday, St. Petersburg, Fla.-based Raymond James priced a $350 million offering of 6.9% $25-par senior notes due March 15, 2042.

The company announced the deal Wednesday, and a trader had speculated that about 8 million, or $200 million, of the notes were going to be issued, with pricing around 7%. In Wednesday's gray market, the baby bonds were already trading at or above par.

The strength continued Thursday, and a trader said the deal was "real strong."

He quoted the notes at $25.45 bid, $25.58 offered shortly before the market closed.

"I jumped a lot today," said another market source. The source said about 4.9 million of the notes changed hands, with the volume-weighted average price coming in at $25.33. He quoted the issue at $25.50 bid, $25.60 offered at the close.

Settlement is expected March 7.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Raymond James & Associates Inc. are the joint bookrunners. Co-managers are Fifth Third Securities Inc., U.S. Bancorp Investments Inc., BB&T Capital Markets and BNY Mellon Capital Markets LLC.

Proceeds will be used to partially fund the company's acquisition of Morgan Keegan & Co. Inc. and MK Holding Inc.

Health Care deal up strong

Health Care REIT also priced a deal late Wednesday, bringing a $287.5 million sale of 6.5% series J cumulative redeemable perpetual preferred stock.

Sources said the deal was also faring well, though perhaps not as well as the Raymond James deal.

"It moved up strong," one trader said, seeing the preferreds trade at $25.30 before the bell.

Another source pegged the paper at $25.28 bid, $25.38 offered at the close.

Pricing came at the low end of talk.

Health Care will apply to list the preferreds on the New York Stock Exchange under the ticker symbol "HCNPJ." Settlement is expected March 7.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

Co-managers are Barclays Capital Inc., Raymond James & Associates, RBC Capital Markets LLC and Stifel, Nicolaus & Co. Inc.

Proceeds will be used to redeem all of the company's 7.875% series D cumulative redeemable preferred stock and 7.625% series F cumulative redeemable preferred stock. Remaining funds will be used for general corporate purposes.

The series D preferreds (NYSE: HCNPD) fell 5 cents to $25.44. The series F preferreds (NYSE: HCNPF) lost 2 cents, closing at $25.43.

The real estate investment trust is focused on senior housing and health-care facilities and is based in Toledo, Ohio.

RBS dominates secondary

Royal Bank of Scotland's preferred complex was mixed on the day, but its 5.9% noncumulative guaranteed trust preferreds (NYSE: RBSPE) and 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) were dominating the secondary market.

Both issues traded up, the Es earning 18 cents, or 1.32%, to close at $13.77 and the Gs climbing 15 cents, or 1.1%, to $13.82.

A market source said it was no surprise that the two issues were on the more active side, given the belief held by some that the securities will begin to pay dividends within the next 12 to 18 months.

"It wouldn't be paying until next year anyway," he said.

RBS is an Edinburgh-based bank majority controlled by the U.K. government.

Broad market mixed

Elsewhere in the marketplace, Morgan Stanley's floating-rate series A noncumulative preferreds (NYSE: MSPA) fell a dime to $17.77.

Nexen Inc.'s 7.35% $25-par subordinated notes due 2043 (NYSE: NXYPB) meantime gained a deuce, ending at $25.29.

And UBS AG's floating-rate noncumulative trust preferreds (NYSE: UBSPD) were one of the day's biggest losers, dropping 29 cents, or 2.08%, to $13.65.

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