Scorpio Tankers plans deal; American Capital expected to do well; Morgan Stanley active

By Stephanie N. Rotondo

Phoenix, May 6 - The preferred stock market continued to be firm in early trading Tuesday, though marginally so.

The Wells Fargo Hybrid and Preferred Securities index was up 1 basis point as of mid-morning. The slight gains were erased by the end of the day, as the index closed down 7 bps.

A trader said it was "pretty quiet, no news of new deals."

Scorpio Tankers Inc. did launch an offering of $25-par senior unsecured notes due 2020. However, the trader did not seem enthused about the new issue.

"I don't have anybody that would touch it," he said. "We're seeing a lot of weird names come out of the woodwork right now."

The deal had yet to price as of Tuesday's close.

Stifel Nicolaus & Co., Deutsche Bank Securities Inc. and Jefferies LLC are the joint bookrunning managers. Co-managers are BB&T Capital Markets, Janney Montgomery Scott LLC and Wunderlich Securities Inc.

The Monaco-based oil tanker business will use the proceeds for general corporate purposes, including working capital.

Meanwhile, American Capital Agency Corp.'s issue of 7.75% series B cumulative redeemable preferreds - a deal that came late Monday - was seen at $24.65 bid, $24.75 offered.

The offering was upsized to $175 million from $100 million and came at the tight end of talk.

A trader said it had not yet freed to trade as of mid-morning.

Another market source said that while he had not seen any markets for the new issue, he expected it would do well, noting that investors were making orders that the leads wouldn't take.

"So either they must have been heavily oversubscribed or they are greedy...or both."

Joint bookrunners were Morgan Stanley & Co. LLC and UBS Securities LLC. Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and RBC Capital Markets acted as joint lead managers.

Volume centered on few issues

In the secondary, volume was on the light side, with the exception of a handful of issues, including Morgan Stanley's $500 million of 6.625% $25-par series G noncumulative perpetual preferred stock (NYSE: MSPG).

The paper was trading at $25.05, off 3 cents in early trades, and well over 900,000 shares had already been exchanged. By the end of the day, that number had ballooned to 1.6 million shares, with the stock ending at $25.13, up a nickel.

The deal priced April 22.

As active as that security was, Royal Bank of Scotland Group plc's 6.6% series S noncumulative dollar preference shares beat it, as over 1.7 million shares of the preferreds traded.

The paper (NYSE: RBSPS) ended down 2 cents at $24.21.

Coming in as third most active was JPMorgan Chase & Co.'s 6.7% series T noncumulative preferred stock (NYSE: JPMPB), with about 1.13 million shares turning over. The issue closed down 3 cents to $25.41.

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