Black & Decker hangs on; other recent issues slip; Senior Housing, Vornado list; RBS slides

By Stephanie N. Rotondo

Phoenix, July 23 - The preferred stock market was trading softer Monday, following a trend set by the broader financial markets.

"Everyone is afraid of Spain again," a trader said.

The fear was also affecting the primary arena, as chatter of a new deal from a domestic bank fizzled.

"There was talk of a new deal in a domestic bank, but that did not materialize," a trader said, pointing to a declining equity market as a possible reason for the no-show. He speculated that the deal could still come Tuesday.

Another market source said he heard two new domestic perpetual deals were set to come to market, though he was not sure if they were banks or not. When those deals did not come either, the source said it "made sense" given the day's market conditions.

"There's lots of rumors of heavy supply," he said. "But if this keeps up, there won't be for long."

Of the day's goings-on, even recently priced deals were feeling the pain.

"All the new issues seem to be weaker," a trader said.

That included Stanley Black & Decker Inc.'s $750 million issue of 5.75% $25-par junior subordinated notes due 2052, the day's most actively traded security.

Meanwhile, several recent issues listed on the New York Stock Exchange Monday, including Senior Housing Properties Trust's 5.625% $25-par senior notes due Aug. 1, 2052 and Vornado Realty Trust's 5.7% series K cumulative redeemable preferreds.

The secondary saw many European issues getting stomped, "but especially" Royal Bank of Scotland Group plc, a source said.

Black & Decker hangs in

Black & Decker's 5.75% $25-par notes were "holding in" at $25.20, a trader said at midday.

That was still weaker from Friday levels.

After the close, a market source said the last trades of the day occurred around par but added that the volume-weighted average price was $25.34, about in line with Friday.

Also in the primary, Invesco Mortgage Capital Inc.'s $135 million of 7.75% series A cumulative redeemable perpetual preferred stock meantime had bids of $24.50, according to a trader. That deal priced Thursday.

But it was CommonWealth REIT's new $175 million issue of 5.75% $25-par senior notes due Aug. 1, 2042 that was "getting beat up," the trader said.

He saw the notes quoted at $24.00 bid, $24.30 offered. The deal priced Friday.

The trader blamed the paper's poor performance on "pretty aggressive" pricing.

Senior Housing, Vornado list

Senior Housing Properties' new 5.625% notes due 2042 officially listed on the NYSE Monday, as did Vornado Realty's 5.7% series K preferreds.

The Senior Housing issue (NYSE: SNHN) was trading at $23.94 at midday and closed at $23.85.

The Vornado preferreds (NYSE: VNOPK) were down 4 cents at $24.65 in midafternoon trading. The issue ended up 3 cents at $24.72.

Senior Housing priced its $350 million issue on July 17. Vornado's $300 million issue came July 11.

RBS, Europeans slide

Concerns about Spain and Italy and the European Union's ability to handle the issue weighed heavily on the broad markets Monday. In the preferred space, it was particularly hard for European issuers.

"It was a tough day for RBS and Europeans, but especially for RBS," a market source said.

RBS' 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) fell 53 cents, or 2.7%, to $19.12, and the 7.25% series Ts (NYSE: RBSPT) lost 63 cents, or 2.82%, to close at $21.57.

Deutsche Bank AG's 7.6% trust preferreds (NYSE: DTK) meantime fell 49 cents, or 1.84%, to $26.09, while ING Groep NV's 8.5% perpetual hybrid capital securities (NYSE: IGK) dropped 39 cents, or 1.5%, to $25.61.

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