Southern California Edison trust brings trust preference shares to market; GE frees up

By Stephanie N. Rotondo

Phoenix, Jan. 23 - A preferred stock trader said on Wednesday that "we keep hearing there's going to be a strong new issue market."

The new issues continued to churn out at midweek, as Southern California Edison Co. announced a sale of trust preference shares linked to SCE Trust II.

Price talk was 5.125% to 5.25%, a trader said, but was revised lower, putting pressure on the markets.

The deal priced after the close, coming upsized at $500 million to yield 5.1%.

In the secondary arena, Prologis Inc. was an active name. On Tuesday, the company announced it had inked a build-to-suit deal with Amazon.

Overall, a market source remarked that the preferred space was down, albeit on light volume.

SCE Trust sells trust shares

Southern California Edison's SCE Trust II priced $500 million of 5.1% trust preference shares on Wednesday.

The deal was originally expected to be about $200 million, with price talk at 5.125% to 5.25%.

A trader saw the issue ahead of pricing at $24.85 in the gray market. However, he noted that the deal had "come in a little bit, so I'd guess they are going to revise talk on that."

"But I think it's doing pretty well," he added.

The trader's speculation proved true as the deal came at 5.1%, leaving the paper at $24.65 bid, $24.70 offered at the close.

"It's doing very good," another trader said. "They did a good job syndicating it."

The second trader also noted that "retail liked it.

"It's got a better credit rating than [Duke Energy Corp.'s new 5.125% junior subordinated debentures due 2073], which are above par."

The trader agreed that the revised talk might have weighed on the issue, although he also pointed out that there was "just a lot of paper out there," considering the deal doubled in size.

GE frees; Farmer Mac lists

Among other recent deals, General Electric Capital Corp.'s newly priced $550 million of 4.875% $25-par senior notes due 2053 freed to trade after coming on Tuesday.

A trader quoted the issue at $24.75 bid, $24.80 offered.

As was expected, Federal Agricultural Mortgage Corp.'s $60 million of 5.875% series C perpetual preferreds - a deal that priced Jan. 14 - listed on the New York Stock Exchange under the ticker symbol "AGMPA."

"It finally listed, but I don't think anybody saw it," a trader commented, seeing a $25.16 bid, $25.30 offered market for the paper at midday.

The issue was trading at $25.05 at the close, versus opening levels of $25.50.

Prologis active, softer

Prologis' 8.54% $50-par series Q cumulative redeemable preferreds (OTCBB: PLDGP) were among the day's most actively traded issues, just one day after the company announced a build-to-suit deal with Amazon.

The preferreds fell a buck, or 1.56%, to $63.00.

On Tuesday, the San Francisco-based real estate investment trust inked a deal with Amazon to build a more than 1 million square foot distribution center in Tracy, Calif. The development will be part of Prologis' Prologis Park Tracy Phase II, which will be at capacity upon completion of the Amazon project.

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