Primary market active, expected to stay that way; W.R. Berkley, Aspen Insurance price

By Stephanie N. Rotondo

Phoenix, April 25 - The primary preferred stock market remained busy Thursday, and it was expected to stay that way for the near future.

"From what I know, it's going to stay busy for awhile," a trader said, adding that the next week's calendar was going to be "fully loaded." He noted that the market could see a deal from U.S. Bancorp.

"They've got a 7.875% [series D noncumulative perpetual preferred] that just became callable," he said. He was surprised the issue hadn't been called already but speculated that perhaps the bank wanted to bring a new deal first.

However, the trader also said he did not expect to see any new issues coming on Friday.

As for Thursday's new deals, W.R. Berkley Corp. said it was planning a sale of at least $150 million of $25-par subordinated debentures due 2053.

Price talk was around 5.75%. The issue ended up coming at 5.625% with $350 million of the debentures being sold.

Also announced Thursday was an offering of fixed-to-floating rate noncumulative preference shares from Aspen Insurance Holdings Ltd. That issue priced at 5.95% with $275 million shares getting sold.

From Wednesday business, BB&T Corp.'s $450 million of 5.2% series G noncumulative perpetual preferreds freed up in early afternoon trading, according to a market source.

In the secondary, MPG Office Trust Inc.'s preferreds dominated overall trading, as it was announced that the company was being bought by Brookfield Office Properties Inc.

And, Royal Bank of Scotland Group plc was moving up following news that Jim O'Neil, head of U.K. Financial Investments, was resigning after just a year in that post.

W.R. Berkley prices notes

W.R. Berkley priced a $350 million offering of 5.625% $25-par subordinated debentures due April 30, 2053 on Thursday.

"They are keeping it pretty tight to the vest," a trader said, seeing a $24.81 bid in the gray market at midday. He said the issue had traded up to $24.85 at one point.

After the close, a market source quoted the issue at $24.92 bid, $24.97 offered.

"I thought it would end up a little better," the source said.

Proceeds will be used to repay all or part of the $250 million of 6.75% subordinated debentures due 2045 currently held by W.R. Berkley Capital Trust II and for general corporate purposes. W.R. Capital Trust II would then use the funds to call all or part of its 6.75% trust originated preferred securities.

W.R. Berkley is a Greenwich, Conn.-based insurance holding company.

Aspen's new deal

Another insurance company, Aspen Insurance Holdings, brought a deal Thursday as well.

The Hamilton, Bermuda-based company sold $275 million of 5.95% fixed-to-floating rate noncumulative preference shares.

A market source said initial price talk was around 6.25%.

"That's being held pretty tight as well," a trader said. "There's not much going out."

He saw a par bid for the paper, "so it's hot, hot."

"They had a lot more demand," a source said. "But they really didn't grow the size all that much."

He saw the issue at $25.30 bid post-pricing.

Proceeds will be used to settle the cash portion of the mandatory conversion of the company's 5.625% perpetual Piers and any remaining funds for general corporate purposes.

BB&T frees up

BB&T's new $450 million of 5.2% series G noncumulative perpetual preferreds freed from the syndicate in the early afternoon, according to a source.

The deal priced Wednesday.

At midday, the preferreds were pegged at $24.70 bid, $24.77 offered. After the bell, source saw the paper at $24.73 bid, $24.78 offered.

BB&T is a Winston-Salem, N.C.-based financial institution.

Recent deals stay busy

As for other recent deals, Teekay Offshore Partners LP's $150 million of 7.25% series A cumulative redeemable preferreds "traded into a $25.18 bid," a trader said.

CYS Investments Inc.'s $200 million of 7.5% series B cumulative redeemable preferreds meantime were quoted at $24.75 bid, $24.78 offered at midday.

After the close, a source said the issue was among the day's most actively traded, calling the securities flat at $24.78.

MPG pops on buyout

MPG Office Trust is being bought out by Brookfield Office Properties, which resulted in heavy trading for the Los Angeles-based real estate investment trust.

The 7.625% series A cumulative redeemable preferreds (NYSE: MPGPA) traded up $1.05, or 3.91%, to $28.06.

But one source remarked that given the large premium the peferreds are currently trading at, it did not make sense in terms of the sale agreement.

Under the terms of the sale, Brookfield will pay $3.15 per common share and then hold a tender offer for the preferreds. However, the currently proposed tender offer price is $25.00 per share.

"That's 12% below the current price," the source said. "I can't imagine the preferred holders are that dumb."

The sale is expected to close in the third quarter.

RBS up on UKFI chief exit

Royal Bank of Scotland's preferred and preference shares were active and higher amid news that Jim O'Neil, head of the UKFI, had resigned.

The 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) put on 4 cents, ending at $21.38, while the 5.9% noncumulative guaranteed trust preferreds (NYSE: RBSPE) earned 8 cents, closing at $21.22.

The 6.4% series M noncumulative dollar preference shares (NYSE: RBSPM) rose 13 cents to $22.27, and the 5.75% series L noncumulative dollar preference shares (NYSE: RBSPL) popped by 14 cents to $22.84.

News outlets reported O'Neil's departure as something that was negative for U.K. banks.

"The move was widely seen as a vote of no confidence by the corporate finance specialist in plans to accelerate the re-privatisation of the two banks," according to London's The Guardian.

But a market source said he considered the news more "neutral" than anything else.

"It really depends on who they replace him with," the source said.

For his part, O'Neil was a proponent of selling off the government's stake in RBS and Lloyd's Banking plc as soon as possible, the source explained. He favored selling the banks off as a "scaled-down version." Others, however, lean more toward breaking the banks up into smaller pieces.

Either way, the source was puzzled as to why the preferred shares would react positively to the news.

"It seems kind of odd," he said.

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