Government Properties sells upsized $25-par notes; W.R. Berkley frees up; market slides

By Stephanie N. Rotondo

Seattle, May 19 – The primary preferred stock market continued to see deals flow Thursday as Government Properties Income Trust brought a $300 million offering of 5.875% $25-par senior unsecured notes due 2046.

Price talk was in the 6% area, according to a market source. It was later revised to 5.875% to 6%.

The deal also came upsized from $100 million.

The deal was run by BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC.

After pricing was revised, a trader pegged the paper at $24.85 bid, $24.90 offered in the gray market. Once the deal size was increased, it came in to $24.75 bid, $24.80 offered.

Meanwhile, W.R. Berkley Corp.’s $290 million of 5.75% $25-par subordinated debentures due 2056 – a deal priced Wednesday – had freed to trade by mid-morning, a trader said.

He pegged the issue at $24.95.

Morgan Stanley, BofA Merrill Lynch, UBS Securities and Wells Fargo ran that deal as well.

Also from Wednesday’s business, LaSalle Hotel Properties’ $150 million of 6.3% series J cumulative preferreds were seen at $24.96 bid, no offers.

The issue came early Wednesday via Wells Fargo and BofA. Initial price talk was between 6.375% and 6.5%.

In new listings, Sunstone Hotel Investors Inc.’s $75 million of 6.45% series F cumulative redeemable preferreds began trading on the New York Stock Exchange on Thursday.

The ticker symbol is “SHOPF.” The deal came May 10.

The paper was trading at $25.70 at mid-morning, down from $25.75 at the open. It closed at $25.65.

Market in retreat

Overall, the preferred stock market was dwindling again, following the trend set Wednesday when the Federal Reserve released its minutes from its April meeting.

The minutes indicated that the economy was improving and therefore a rate increase was on the table for June or July.

After the minutes were released, Fed officials came out reinforcing their belief that things were on track for such a hike – as well as one or two more possibly this year.

But the markets haven’t reacted too well to the news. The Dow Jones industrials have retreated from the year’s high, and a surging dollar has stemmed a rally in domestic crude oil prices.

The Wells Fargo Hybrid and Preferred Securities index waned 29 basis points on Thursday. It lost about that much in midweek trading.

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