CommonWealth, Endurance new issues trade up; Sempra subsidiary preferreds gain on call news

By Stephanie N. Rotondo

Portland, Ore., May 27 - Many preferred stock players got a jumpstart on the holiday weekend, and the increasing number of empty desks resulted in a "very quiet" Friday, according to one trader that stayed behind.

"Volume is very light," said another market source.

CommonWealth REIT and Endurance Specialty Holdings Ltd.'s new issues were seen performing relatively well in the subdued marketplace. However, given the holiday weekend and the absent traders, CommonWealth's new issue - which priced Thursday - will not be free to trade until Tuesday, a trader told Prospect News.

In listed securities, Sempra Energy announced Wednesday that its Pacific Enterprises subsidiary will redeem five issues of $100-par preferreds in June. A trader said the paper traded up in response and also remarked that the call was "an interesting sign."

Fellow power-producer Cleco Corp. also announced a redemption earlier in the week, which resulted in a double-digit gain for its 4.5% preferreds.

CommonWealth, Endurance rise

CommonWealth's new $250 million issue of 7.25% series E cumulative redeemable perpetual preferreds traded up to "$24.80-ish," according to a trader.

The deal priced Thursday and was trading around $24.70 in the gray market by day's end.

The trader noted that the shares "are not going to be free to trade" until Tuesday given the long holiday weekend.

Also in new issues, Endurance Specialty Holdings' $230 million issue of 7.5% non-cumulative series B perpetual preferreds that came Tuesday were also somewhat better.

A trader quoted the preferreds at par bid, $25.15 offered.

Sempra gains on call

A trader said that recent redemption announcements from utility companies - specifically, Sempra Energy and Cleco - were an "interesting sign."

"The coupons are so low," he said. "It's cheap money." That left him wondering what the purpose of the calls was.

"Are they cleaning up the balance [sheet] for a possible merger?" he said. "It's just odd that these companies are doing this. It could be that banks are actually lending now."

Still, the news that Sempra's Pacific Enterprises subsidiary called its 4.36% series A preferreds, 4.4% series B preferreds, 4.5% series C preferreds, 4.75% series D preferreds and 4.75% convertible preferreds pushed the issues higher.

"These are $100-par issues," the trader said. "They are all trading up about 20 points from yesterday."

The preferreds followed a trend set by Cleco, which said Monday it will redeem its 4.5% $100-par series 1951 preferreds. The news pushed up Cleco's preferred stock nearly 20 points on Tuesday to end around $100 (Pink Sheets: CLAEP).

Cleco is redeeming the preferreds at $101.296 per share on June 24.

For its part, Sempra is redeeming its preferreds at $100 to $101.50 per share, depending on the issue, plus accrued dividends through the June 30 redemption date.

Sempra expects the call to cost about $81 million.

A trader said the series A preferreds closed up $19.94 at $101.60 (NYSE Amex: PETPA), while the series Bs gained $21.00 to close at $102.00 (NYSE Amex: PETPB).

The series Cs improved by $16.20 to $100.70 (NYSE Amex: PETPC), and the Ds rose $13.10 to $100.60 (NYSE Amex: PETPD).

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