Qwest brings new issue at 7%, doubles it; NextEra active, nears par; American Financial lists

By Stephanie N. Rotondo

Phoenix, June 14 - Preferred stocks bucked the overall market trend Thursday, ending slightly weaker on the day, according to a market source.

A fair share of the market's focus was on new issues.

Qwest Corp. announced a sale of $25-par 40-year senior notes. The deal priced by the day's close and had doubled in size, a source said. The new deal was already trading within inches of par.

Meanwhile, NextEra Energy Capital Holdings Inc.'s new 5.625% $25-par series H junior subordinated debentures due June 15, 2072 also inched closer to par, according to a trader.

American Financial Group Inc.'s $200 million offering of 6.375% $25-par senior notes due 2042 officially listed on the New York Stock Exchange, as was expected.

In secondary dealings, recently called issues from Citigroup Inc. and JPMorgan Chase & Co. continued to be "recycled," as one source put it.

Qwest deal doubles in size

Monroe, La.-based Qwest priced a $400 million offering of $25-par 7% senior notes due July 1, 2052 on Thursday.

Pricing came in line with talk, though a source noted that the deal had doubled in size.

At midday, the notes were "doing pretty well," trading in the high $24.80s to low $24.90s, a trader said.

"It rose pretty quickly in the gray market," a source remarked. "We were kind of amazed, especially because they doubled the size."

The source saw paper going out at $24.87 bid, $24.97 offered but added that the notes had hit a low of $24.65 bid, $24.80 offered earlier in the day.

The telecommunications provider will apply to list the notes on the NYSE. Settlement is expected June 25.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers. Joint lead managers are Raymond James & Associates Inc. and RBC Capital Markets LLC.

Proceeds will be used with available cash and additional borrowings from parent company CenturyLink Inc. to redeem $484 million of 7.5% notes due 2051.

That issue (NYSE: CTW) traded down 48 cents, or 1.81%, to $26.02.

NextEra noses par

NextEra Energy Capital's new 5.625% $25-par series H junior subordinated debentures due 2072 again saw active trading, according to a market source.

More than 1 million of the notes changed hands during the day's session, he said. The notes were trading - and "in size" - higher in a $24.90 to $24.94 context.

"Most of the trades," he said, occurred in a $24.90 to $24.95 range throughout the day. The volume-weighted average price was $24.91.

The $325 million offering priced Tuesday and freed to trade on Wednesday.

NextEra Inc. is a Juno Beach, Fla.-based power provider.

American Financial lists

American Financial Group's recently priced offering of 6.375% $25-par senior notes due 2042 officially listed on the NYSE on Thursday.

The ticker symbol is "AFW." The notes were trading at par.

American Financial priced the deal June 7. Proceeds from the sale will be used along with cash on hand to redeem $112.5 million of 7.5% senior notes due November 2033 and $86.25 million of 7.25% notes due January 2034. Any remaining proceeds will be used to partially redeem the company's 7.125% senior debentures due 2034, of which $115 million is outstanding.

Proceeds will also be used for general working capital purposes.

American Financial Group is a Cincinnati-based insurance company.

Citi, JPMorgan 'recycling'

Recently called issues from Citigroup and JPMorgan remained active in Thursday dealings.

Citi's 8.5% fixed-to-floating series J trust preferreds (NYSE: CPJ) closed up a penny at $25.60, while JPMorgan's 8% trust preferreds (NYSE: JPMPZ) were slightly higher at $25.28.

A source noted that it was not a surprise that these issues in particular have been trading busily this week, calling it a normal course of "recycling of paper" that occurs when issues get called.

Both banks have announced redemptions of trust preferreds in the last week after the Federal Reserve released its proposed new capital treatment rules last week. Under the new rules, certain issues of trust preferreds will no longer be considered tier 1 capital.

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