Preferreds end week firm; Sunstone prices; new BB&T, Charles Schwab active, unchanged

By Stephanie N. Rotondo

Seattle, March 4 – Preferred stocks were ticking higher on Friday following a U.S. non-farm jobs number that was better than expected.

The Wells Fargo Hybrid and Preferred Securities index ended up 15 basis points. However, a market source noted that trading volume was “light overall,” even among recently priced deals.

The latest report from the Labor Department showed non-farm payrolls increasing by 242,000 in February. Additionally, December and January figures were revised to include another 30,000 new jobs.

Market watchers had been predicting an addition of 190,000 last month.

“In the wake of the report, a trader said “people are kind of taking risk off on fixed-rate issues.” He noted that fixed-to-floating rate issues, as well as $1,000-pars, were inching upward.

Sunstone Hotel Investors Inc. capped the week’s final trading session by pricing a new issue, a $115 million offering of 6.95% series E cumulative redeemable preferreds.

Initial price talk was 7%, a market source said on Thursday after the deal was first launched.

Post-pricing, a trader saw the issue at $24.85 bid.

The deal came via Wells Fargo Securities LLC and BofA Merrill Lynch.

The Aliso Viejo, Calif.-based real estate investment trust will use the proceeds to redeem its 8% series D cumulative redeemable preferreds (NYSE: SHOPD), which last traded at $25.40 on Thursday.

The issue is being called on April 6.

Among other deals from the week, BB&T Corp.’s $425 million of 5.625% series H noncumulative perpetual preferreds – a deal priced Wednesday – were seen finishing unchanged at $24.80, though paper traded as high as $24.95. The new securities were also the most actively traded of the day, with well over 2 million preferreds being exchanged.

The issue is trading under a temporary ticker symbol, “BBTTP.”

From Tuesday’s business, Southern California Edison Co.’s SCE Trust V’s $300 million of 5.45% fixed-to-floating rate trust preference securities were initially pegged at $25.45 but went out at $25.57, according to a market source.

The source deemed the issue off 3 cents.

And, Charles Schwab Corp.’s $750 million of 5.95% series D noncumulative perpetual preferreds – a deal priced Monday and freed on Tuesday – were seen ending “kind of flat-ish” at $25.15, a source said.

Looking ahead, a trader said the new issue pipeline was expected to keep flowing.

“I am hearing we are going to have a very active week next week,” he said.

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