Midday Commentary: Preferred stock market still weak; Solar Capital to sell senior notes

By Stephanie N. Rotondo

Phoenix, Nov. 8 - The preferred stock market continued to see light dealings, a trader said at midday on Thursday.

"Everything is soft, but there's really not a lot going on," he said. "The secondary is even quieter than it was yesterday."

In the primary, Solar Capital Ltd. announced its intent to sell at least $75 million of $25-par notes due 2042.

Price talk is around 6.75%, a trader said.

"Nobody was allowed in; there's no selling group, no syndicate," the trader remarked.

He noted that the company had done a private placement in May of a 5.875% seven-year secured bond.

"An unsecured 30-year senior note for this tiny little company at 6.75% didn't look incredibly attractive to me," he said. "I don't think a lot of people will be playing in it."

The trader further said that he was not sure if the size of the deal would grow, adding that the company was "putting it all away to retail."

He saw a less 35 cent bid for paper early in the session and a less 5 cent offer closer to midafternoon.

Joint bookrunners are Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Wells Fargo Securities LLC, Deutsche Bank Securities Inc. and RBC Capital Markets LLC.

Proceeds will be used to pay down debt and for general corporate purposes.

Meanwhile, City National Corp.'s new $175 million issue of 5.5% series C noncumulative perpetual preferreds - a deal that priced late Monday - finally freed to trade, according to a trader.

Paper was seen at $24.55, though the trader said he thought it had traded below that mark early on in the day.

Everbank Financial Corp.'s $150 million of 6.75% series A noncumulative perpetual preferreds - another deal that came Monday - was at $24.60.

And, Sun Communities Inc.'s $75 million of 7.125% series A cumulative redeemable perpetual preferreds were pegged at $24.85 bid, $24.90 offered.

That deal came Tuesday.

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