U.S. Cellular new issue prices, expected to do well; RBS preferreds gain ground; Citi falls

By Stephanie N. Rotondo

Portland, Ore., May 9 - Preferred stocks ended Monday's session largely flat, markets sources reported.

"It was not such a busy day," a source said, estimating that about $260 million of preferreds traded.

The big news of the day was a new issue from United States Cellular Corp. The company announced the $25.00-par bond deal early in the session and by mid-day, price talk had been revised. Pricing came around the market's close at the low end of talk, according to sources.

Meanwhile, Royal Bank of Scotland Group plc and Citigroup Inc. continued to be among the most actively traded securities.

U.S. Cellular brings deal

U.S. Cellular said it would issue senior bonds at par of $25.00 on Monday.

The market was expecting the deal to be $100 million, but it was upsized to $300 million.

"We kind of knew they were going to," one source said, because the company intends to use the proceeds to redeem some or all of its $330 million of outstanding 7.5% notes due 2034.

Also, price talk had originally been 7% to 7.125% but was later revised to 6.95% to 7%.

The coupon came at 6.95%.

A trader said the deal is "very similar in structure" to a 7% deal that Telephone & Data Systems Inc. - which owns U.S. Cellular - brought recently. A trader said that those notes were trading at $25.25 shortly before the market closed.

"This should do very well even if they price it at 6.95%," a trader said, seeing the notes at $24.85 in the gray market.

Another source quoted the new issue at $24.84 bid, $24.87 offered.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunners. RBC Capital Markets LLC, BNY Mellon Capital Markets LLC, Comerica Securities, SunTrust Robinson Humphrey Inc., TD Securities (USA) LLC and U.S. Bancorp Investments Inc. are the co-managers.

U.S. Cellular is a Chicago-based telecommunications provider.

RBS gains, Citi falls

In the financial space, Royal Bank of Scotland and Citigroup remain active, though the preferreds closed the day mixed, according to a market source.

The source saw RBS' series L preferreds closing 3 cents higher at $19.21. Citi's 8.5% series Js, however, fell 11 cents to $26.40.

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