Bank of America paper continues to gain momentum; Public Storage new issue frees, trades up

By Stephanie N. Rotondo

Portland, Ore., Jan. 6 - Preferred stocks continued to do well in Friday trading, even as straight equities were dwindling.

"I thought we'd see a sell-off," one trader said, particularly in Bank of America Corp. The bank's preferreds had gotten a boost from rumors circulating Thursday regarding a plan to launch a $1 trillion federal program aimed at helping people refinance their homes.

After Thursday's close, White House officials said there was no such plan in the works. But federal officials then came out Friday, stating that further action is needed to help the industry and those in danger of losing their homes.

"So clearly it's an option that could be out there," the trader said. Either way, Bank of America's preferreds were continuing to gain, albeit more modestly than the previous session.

The 8.2% series H depositary shares (NYSE: BACPH) ended up 8 cents at $23.90, while the floating-rate series E noncumulative preferreds (NYSE: BACPE) gained 11 cents to close at $16.70.

The Merrill Lynch 8.625% series 8 noncumulative preferreds (NYSE: BMLPQ) improved by 15 cents to $24.00.

Public Storage issue gains

Elsewhere, Public Storage's new $400 million issue of 5.9% series S cumulative perpetual preferred shares freed from the syndicate late Friday morning, according to a market source.

At that time, he saw the preferreds at $24.92 bid, $24.97 offered in the gray market, up from $24.82 bid, $24.92 offered on Thursday.

The deal priced Thursday and was massively upsized.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint book-running managers.

The preferreds were sold as depositary shares each representing a 1/1,000th interest in a cumulative preferred share of beneficial interest, series S, according to the prospectus.

Cumulative dividends will be payable quarterly beginning March 31. The preferreds can be redeemed after Jan. 12, 2017 at par plus accrued dividends.

There is no stated maturity, sinking fund or mandatory redemption.

Settlement is expected Thursday.

Proceeds will be used to make investments in self-storage facilities and in entities that own self-storage facilities, to redeem preferred securities and for other general corporate purposes.

The Glendale, Calif.-based real estate investment trust intends to list the preferreds on the New York Stock Exchange.

On Thursday, Public Storage announced that it planned to redeem $206.67 million of its 6.75% series L cumulative preferreds (NYSE: PSAPL).

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