Morning Commentary: Sunstone Hotel selling cumulative preferreds; BB&T not yet freed

By Stephanie N. Rotondo

Seattle, March 3 – The preferred stock new issue pipeline was showing no signs of letting up on Thursday as Sunstone Hotel Investors Inc. announced an offering of series E cumulative redeemable perpetual preferreds.

A market source said price talk was around 7%, with Wells Fargo Securities LLC and BofA Merrill Lynch running the books.

The Aliso Viejo, Calif.-based real estate investment trust plans to use the proceeds in part to redeem some or all of its outstanding 8% series D cumulative redeemable preferreds (NYSE: SHOPD). That issue was inching higher, rising 3 cents to $25.37 at mid-morning.

From midweek business, BB&T Corp.’s $425 million of 5.625% series H noncumulative perpetual preferreds had not yet freed as of mid-morning, according to a trader.

The trader saw the issue at $24.80 bid, $24.82 offered.

The deal was upsized from $150 million, and pricing came tighter than the initial 5.75% to 5.875% talk.

Meanwhile, Southern California Edison Co.’s SCE Trust V’s $300 million of 5.45% fixed-to-floating rate trust preference securities – a deal priced Tuesday and freed Wednesday – were pegged at $25.33 bid.

And, Charles Schwab Corp.’s $750 million of 5.95% series D noncumulative perpetual preferreds – a deal priced Monday and freed on Tuesday – were quoted at $25.33 bid, $25.45 offered.

Among deals from the previous week, W.R. Berkley Corp.’s 5.9% $25-par subordinated notes due 2056 – a $110 million deal, including a $10 million greenshoe, that priced Feb. 23 – were admitted to the New York Stock Exchange on Thursday.

The ticker symbol is “WRBPC.”

Paper was trading at $24.84 at mid-morning, up from opening levels of $24.80.

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