Qwest, Pebblebrook Hotel prepare preferred deals; Ally Financial series A preferreds busy

By Andrea Heisinger

New York, Sept. 13 - The big news in the preferred stock market Tuesday was that Qwest Corp. is planning a $250 million sale of $25-par notes.

The paper has a 40-year maturity and was not expected to price until Wednesday, sources said.

"It's doing well in trading," a trader said early in the afternoon. "I'm seeing it at $24.75 with strong interest."

There was also news that Pebblebrook Hotel Trust will sell $75 million of perpetual $25-par preferred securities.

The market overall ended up 7 cents on the day, and a trader said it was "mixed on lighter volume."

The most trading activity was seen in Ally Financial Inc.'s series A preferreds. Volume on the paper was 3.77 million preferreds, "which is a lot," a source said. The preferreds ended down 23 cents at $19.58.

"It was largely attributed to a negative report on them," the source said, adding that the report was from CreditSights, an independent research provider for credit markets.

ING paper moves

Elsewhere in the market, there was a boost to foreign insurers on a report from Bank of America Corp. A trader said that names such as ING Groep NV were trading flat after getting pummeled in previous days.

"A bunch of others were also trading flat, and there's a lot of support for that," the trader said.

Another trader also noticed increased activity in an ING bond, with 516,000 changing hands and a drop of 12 cents on the day to $22.27.

"I'm not quite sure why we saw so much of that ING trade," the second trader said. "That issuer's been hard-hit lately."

Qwest's upcoming 40-year

Qwest is planning to issue $250 million of $25-par 40-year senior notes (Baa3/BBB-/BBB-).

Price talk is around 7.5%, according to a trader. A second trader said that the coupon could go as low as 7.375% and that the size is likely to grow.

Interest will be payable quarterly, according to a prospectus filed with the Securities and Exchange Commission.

The company can redeem the notes after September 2016 at par plus accrued interest.

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

Proceeds from the sale will be used to redeem a portion of the company's $1.5 billion outstanding 8.875% notes.

Qwest intends to list the notes on the New York Stock Exchange.

Qwest, now a subsidiary of CenturyLink, Inc., is a Monroe, La.-based telecommunications provider.

Pebblebrook plans preferreds

Pebblebrook Hotel Trust announced a sale of $25-par series B cumulative redeemable preferred stock. The issue size is expected to be $75 million, and the preferreds are being talked in the 8% area.

The preferreds are callable starting in September 2016 at $25 plus accrued distributions, according to a 424B5 filing with the SEC.

There is a change-of-control call option if Pebblebrook's common stock and the common securities of the acquiring or surviving entity are not listed on a major exchange, and holders will have the right to convert some or all of their preferreds into common shares.

Bank of America Merrill Lynch, Raymond James & Associates and Wells Fargo Securities LLC are the bookrunners.

The hotel investment company is based in Bethesda, Md.

Stephanie N. Rotondo contributed to this review

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