General Growth brings 6.375% cumulative preferreds; RBS declines on Libor scandal fine

By Stephanie N. Rotondo

Phoenix, Feb. 6 - A trader said the preferred stock market was "pretty neutral" during early Wednesday trading.

"There's not really an up or a down bias to it right now," he said.

By the end of business, the market was "kind of mixed," another market source said.

The primary market was shuffling around a new proposed issue from General Growth Properties Inc. The Chicago-based real estate investment trust said it was planning an offering of series A cumulative redeemable preferreds, with price talk around 6.5%.

The deal came at the close, with $250 million of the preferreds being issued at par to yield 6.375%.

Meanwhile, Royal Bank of Scotland Group plc was active and weaker following news of a settlement regarding the bank's role in a Libor rigging scandal. HSBC Holdings plc was also busy but softer, leaving one source to opine that "people are wanting to lighten up on U.K. banks."

General Growth prices

General Growth Properties announced and then priced an offering of series A cumulative redeemable perpetual preferreds on Wednesday.

"They pretty much boxed everybody out; there's no selling group," a trader said ahead of pricing, seeing a $24.85 bid for paper in the midday gray market.

The deal priced at the close, with $250 million of the preferreds being issued at 6.375%.

Initial price talk was around 6.5%.

Another source pegged the issue at $24.89 bid, $24.93 offered.

The company intends to use proceeds for general corporate purposes, including the repayment of a revolving credit facility.

RBS hit by Libor fine

Royal Bank of Scotland was fined $612 million for its role in a Libor rigging scandal, news outlets reported Wednesday.

The Edinburgh-based bank was the third bank to be fined in the aftermath of the investigation.

The news put pressure on the company's preferreds, which were trading actively during the midweek session.

"It was very expensive, very punitive," a source said of the fine, though he remarked that it wasn't so much the fine itself that was causing market jitters. Instead, it was the fact that the bank said it intended to "claw back" employee pay in order to pay for the settlement.

The 5.9% noncumulative guaranteed trust preferreds (NYSE: RBSPE) dipped a penny to $21.35, while the 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) fell 7 cents to $21.56.

The 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) lost a dime to close at $24.51.

Also busy and weaker were HSBC Holdings' 6.5% series H noncumulative preferred shares (NYSE: HBAPH), which declined 2 cents to $25.33.

Recent issues fare well

Selective Insurance Group Inc.'s newly priced $175 million issue of 5.875% $25-par senior notes due 2043 "got quiet," according to a market source. The issue was active ahead of pricing on Tuesday, he said, where it was at $24.60 bid. Come Wednesday morning, the market widened to $24.63 bid, $24.75 offered.

"I haven't seen all that much going on in it," he said.

Another source said that he was not sure if the deal had freed to trade, seeing the issue closing at par.

And, Zions Bancorporation's $171.8 million of 6.3% series G fixed-to-floating rate noncumulative perpetual preferreds - a deal that priced at auction on Jan. 31 - was continuing to do well.

"Those always hold up well," a trader said of the name, quoting the paper at $25.35 bid, $25.47 offered.

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