Winthrop brings downsized deal; Aviva doubles in size; Bank of America mixed on exchange news

By Stephanie N. Rotondo

Portland, Ore., Nov. 18 - Preferred stocks "largely ended flat," a market source reported Friday.

"It was down until [mid-afternoon], then it abruptly changed direction," he said.

After waiting all week, traders finally saw Winthrop Realty Trust price its planned issue of series D cumulative redeemable preferreds. The deal was expected to come at $50 million but instead came at $40 million.

The eagerly anticipated Aviva plc deal also priced Friday. The company priced $400 million of the 30-year $25-par capital securities. But given the tone of the market, the securities were "fading," a source said, by the end of the day.

In the secondary market, Bank of America Corp.'s preferred complex was on the active side but mixed as investors reacted to news regarding the company's preferred stock exchange.

Winthrop comes downsized

Winthrop Realty priced a $40 million offering of 9.25% series D cumulative redeemable preferred shares of beneficial interest, the company said in a press release Friday.

There is a $6 million over-allotment option.

Michael L. Ashner, chief executive officer of the Boston-based real estate investment trust, has committed to purchasing 100,000 preferreds.

One trader said he saw the issue trading around $24.55 in the grey market.

He added that he was not sure if the deal had broken from the syndicate yet.

Barclays Capital Inc. and Stifel Nicolaus Weisel are running the books.

Proceeds are being contributed to the company's operating partnership in exchange for preferred units of partnership interest. The net proceeds will be used to fund future acquisitions, pay down borrowings under a credit facility, repurchase common stock shares and/or for general working capital purposes including funding capital expenditures, tenant improvements and leasing commissions.

Winthrop intends to list the preferreds on the New York Stock Exchange under the symbol "FURPrD."

Aviva prices, fades

Aviva, the London-based insurer, also priced a deal Friday. The capital securities sale was doubled in size to $400 million.

The company is issuing 8.25% 30-year $25-par capital securities. Pricing came in at the low end of price talk.

A trader said he heard the deal was "not going to free today," pegging the issue at $24.65.

"Last I saw, it was fading," said another market source, quoting the securities at $24.62 bid, $24.72 offered.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the joint bookrunning managers.

Co-managers were Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., Janney Montgomery Scott LLC, Morgan Keegan & Co. Inc., Oppenheimer & Co. Inc., Pershing LLC, RBC Capital Markets LLC, Robert W. Baird & Co. Inc., Advisors Asset Management, BB&T Capital Markets, Boenning & Scattergood Inc., C.L. King & Associates Inc., City Securities Corp., D.A. Davidson & Co., Davenport & Co. LLC, HRC Investment Services Inc., JJB Hilliard, WL Lyons LLC, Keefe Bruyette & Woods Inc., KeyBanc Capital Markets Inc., Mesirow Financial Inc., Sterne, Agee & Leach Inc., Synovus Securities Inc., Wedbush Securities Inc., William Blair & Co. Inc., and B.C. Ziegler and Co.

Proceeds will be used for general corporate purposes. The company expects the funds will be counted toward regulatory capital requirements.

Aviva intends to list the securities on the NYSE.

Bank of America mixed

Bank of America preferreds were actively trading Friday, but they closed mixed as investors reacted to new details regarding the bank's plan to exchange preferreds for common stock and senior debt.

The Merrill Lynch floating-rate series 2 noncumulative depositary shares (NYSE: BMLPH) gained 11 cents to close at $16.55, while the 8.625% series 8 noncumulative depositary shares (NYSE: BMLPQ) dropped 13 cents to $23.62.

The floating-rate series E noncumulative depositary shares (NYSE: BACPE) meantime fell 3 cents to finish at $18.41.

In an 8-K filed late Thursday, the Charlotte, N.C.-based bank said that it agreed to privately exchange $2.69 billion of preferreds - including some trust preferreds - for about $1.1 billion of common stock and nearly $1 billion of new senior notes.

The exchanges that have not already settled are expected to do so by Wednesday.

Bank of America had said earlier in the month that it was considering such an action in order to increase its tier 1 capital and to rid its books of some trust preferreds ahead of the Dodd-Frank phase-out.

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