Midday Commentary: DDR, Stanley Black & Decker herald new deals; Kimco, Vornado hit par

By Stephanie N. Rotondo

Phoenix, July 18 - Two companies announced plans to price new issues in the preferred stock market on Wednesday.

First up, DDR Corp. said it plans to sell at least $175 million of class J cumulative redeemable perpetual preferred shares.

Price talk is around 6.625%, according to a trader, who saw the paper trading at $24.82 offered in the gray market.

"No selling group. It's a tiny deal," he said.

J.P. Morgan Securities LLC is the bookrunning manager.

Proceeds will be used to redeem the company's 7.5% class I cumulative redeemable preferreds. Any remaining funds will be used for general corporate purposes, including a possible partial redemption of the 7.375% class H cumulative redeemable preferred stock.

Of those issues, the class I preferreds (NYSE: DDRPI) were down 38 cents, or 1.49%, at $25.12, and the class H preferreds (NYSE: DDRPH) declined a quarter to $25.10.

Stanley Black & Decker Inc. also launched a new issue, an offering of $25-par junior subordinated notes due 2052.

A trader said the issue was trading at par already in the gray market.

"It should be really good demand," he said. "It's a good name, a good yield."

Price talk is around 5.875%.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers. Citigroup Global Markets Inc. and RBC Capital Markets LLC are the co-managers.

Proceeds will be used for general corporate purposes, which may include the repayment of short-term debt and the refinancing of recent and near-term debt maturities.

Among recently priced deals, Kimco Realty Corp.'s $225 million of 5.5% class J cumulative redeemable preferreds were seen hitting par, as were Vornado Realty Trust's $300 million of 5.7% series K cumulative redeemable perpetual preferreds.

Next week, the new issue calendar is supposed to pick up, according to a trader.

"I heard next week is supposed to be busy with new issues," he said. "So that's always good, because we have been pretty bored."

In the secondary, Ally Financial Inc.'s preferred shares were moving higher as the company said it was paying out $201 million of dividends on the preferred securities - including a $134 million payment to the U.S. Treasury Department.

The 8.5% fixed-to-floating-rate series A perpetual preferreds (NYSE: ALLYPB) rose a nickel to $23.40 in midday trading, while the 8.125% series 2 fixed-to-floating-rate trust preferreds (NYSE: ALLYPA) gained 3 cents to trade at $24.38.

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