Midday Commentary: Digital Realty Trust talks new issue at 5.875%; Fannie, Freddie gain steam

By Stephanie N. Rotondo

Phoenix, April 2 - New issues began to trickle in to the preferred market on Tuesday as Digital Realty Trust Inc. announced an offering of series G cumulative redeemable preferred stock.

"I thought price talk on that was kind of weak," a trader aid, noting that talk was around 5.875%. "It doesn't look like there is a selling group."

The trader said the paper had been at $24.60 bid in the early morning gray market but that it was closer to $24.75 bid at midday.

As for the upcoming calendar, the trader said that he was hearing rumors of a Bank of America Corp. deal, though he had yet to see any official details.

Among recent deals, DDR Corp.'s $150 million of 6.25% class K cumulative redeemable preferreds were quoted at $24.90 bid, $24.92 offered.

The deal priced March 25.

And, Kayne Anderson MLP Investment Co.'s $110 million of 3.5% series F mandatory redeemable preferred shares were pegged at par.

That issue, which matures in 2020, priced March 26.

In the secondary, Fannie Mae and Freddie Mac remained topical and active as Fannie reported "record earnings," according to a trader. On the back of the numbers, "all the [agency] preferreds are up 40 to 50 cents."

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