Market muted; DDR frees up; Kayne, Main Street deals eyed; Exelon calls PECO preferreds

By Stephanie N. Rotondo

Phoenix, March 26 - The preferred stock market remained muted on Tuesday, and the arena was generally categorized as "flat" by one market source.

"It seems like everybody is on Spring Break," a trader said.

In the primary, DDR Corp.'s new $150 million issue of 6.25% class K cumulative redeemable preferreds - which priced Monday - freed in early Tuesday trading.

The trader noted that two new deals hit the market, but neither was seeing much play.

Kayne Anderson MLP was talking a new issue of series F mandatory redeemable preferreds at 3.5% to 3.625%. While the trader said the company was "AA-rated" and a "strong company," he added that "nobody is going to care with a yield that low."

Main Street Capital Corp. meantime said it would price an offering of $25-par senior notes due 2023. Late in the day, the $80 million deal priced at 6.125%.

In the secondary, Exelon Corp. said late Monday that it was redeeming all of its PECO Energy Co. preferreds.

"That's interesting because of the low coupons," a trader said, adding that the issues had been issued 50-plus years ago.

DDR frees

DDR's new 6.25% class K cumulative redeemable preferreds freed from the syndicate early in Tuesday's session.

The deal priced Monday.

At midday, a trader saw the issue at $24.70 bid, no offers. At the end of business, a market source quoted the preferreds at $24.72 bid, $24.78 offered.

The Beachwood, Ohio-based real estate investment trust intends to use proceeds together with cash on hand to redeem all outstanding 7.375% class H cumulative preferreds, which is expected to cost $205.5 million, including accrued dividends.

The Hs (NYSE: DDRPH) ended the day up 4 cents at $25.60.

Kayne, Main Street eyed

New proposed issues from Kayne Anderson and Main Street Capital were not enticing investors much on Tuesday.

Kayne Anderson said it was planning to issue at least $100 million of series F mandatory redeemable preferreds.

Price talk was 3.5% to 3.625%, according to a trader.

"There's not a lot of paper out there with maturities," one market source said. In that sense, it made the deal "kind of unique."

"They're probably looking to milk that," he said.

However, sources reported not seeing any markets in the new issue.

Main Street Capital's planned issuance of $25-par senior notes due 2023 was likewise failing to excite investors.

"It's a really small deal," a source said. He saw a gray market of $24.70 bid, $24.75 offered at the close.

Price talk is around 6.25%, according to a trader.

Late in the session, Main Street's $80 million deal priced at par to yield 6.125% via bookrunners Keefe, Bruyette & Woods; Raymond James & Associates Inc.; and RBC Capital Markets LLC.

Exelon calls PECO issues

Late Monday, Exelon announced a redemption of four series of preferreds linked to PECO Energy A trader said the call was "interesting," given that the $100-par securities were originally issued 50 years ago or more.

He also noted that all of the issues had low coupons.

On the news, all the issues were trading up.

The $3.80 series A cumulative preferreds (NYSE: PEPA) were up $11.04, or 11.65%, to $105.84. The $4.30 series B cumulative preferreds (NYSE: PEPB) gained $7.37, or 7.8%, to end at $101.82.

The $4.40 series C cumulative preferreds (NYSE: PEPC) meantime gained the most percentagewise, putting on $13.33, or 13.47%, to finish at $112.32.

And, the $4.68 series D cumulative preferreds (NYSE: PEPD) rose $4.99, or 5.05%, to $103.92.

The redemption date for the preferreds will be May 1. The call price is par plus accrued dividends.

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