Teekay prices preferreds; City Office gets temporary symbol; Deutsche Bank paper rallies

By Stephanie N. Rotondo

Seattle, Sept. 28 – Preferred stocks remained on firm ground on Wednesday, helping the primary space continue to push out new deals.

The Wells Fargo Hybrid and Preferred Securities index finished 9 basis points better.

Teekay LNG Partners LP brought $125 million of 9% series A cumulative redeemable perpetual preferreds units during the session.

Price talk was 9%, according to a market source.

Morgan Stanley & Co. LLC, UBS Securities LLC and Stifel Nicolaus & Co. Inc. ran the books.

Meanwhile, City Office REIT Inc.’s $100 million of 6.625% series A cumulative redeemable preferreds – a deal priced Tuesday – were pegged in a $24.96 to $25.02 range at mid-morning. At the bell, the issue was seen at $24.90, which compared to $25.05 at the open.

A trader said the paper had been assigned a temporary trading symbol, “CYORP.”

As for the secondary market, investors continued to focus on Deutsche Bank AG’s trust preferreds. But after spending much of the last few weeks in decline, the securities had “a little bit of a bounce” in trading, according to a trader.

“But not much of one,” he added.

The gains came as a slew of headlines indicated that the company might not need to raise more capital or depend on state aid as it attempts to deal with ongoing legal battles tied to the subprime mortgage crisis.

Deutsche Bank rebounds

Deutsche Bank’s preferred regained ground in midweek trading, as headlines indicated the German bank was in better shape than previously thought.

The 7.6% trust preferred securities (NYSE: DTK) traded up 77 cents, or 3.33%, to $23.92. Over 1.41 million shares traded, making the issue once again the top trader of the day.

The 8.05% TruPS (NYSE: DKT) ended up 93 cents, or 3.91%, at $24.73. Nearly 1 million of those securities changed hands, putting it squarely in the most active group.

There were a slew of headlines out Wednesday that seemed to ease investors’ concerns about the company’s financial strength, especially as it deals with litigation regarding its role in the subprime mortgage crisis. For instance, John Cryan, chief executive officer, gave an interview with the German newspaper Bild in which he said the need for a state bailout was “not an issue.”

The company itself announced that it had sold off its British insurance unit Abbey Life to Phoenix Group Holdings for the equivalent of $1.22 billion. That encouraged investors, who were looking for signs that Deutsche Bank intended to sell non-core assets.

Another German news outlet, Die Zeit, reported that German officials were already in talks regarding a rescue plan for the struggling bank. However, it was later reported that there was no such plan in the works.

Recently, the U.S. Department of Justice proposed a $14 billion settlement to the bank in regards to an investigation tied to the bank’s role in the subprime mortgage crisis. Deutsche Bank has said it will not accept that offer but instead will negotiate to a settlement amount similar to those given to its U.S. peers.

OPEC deal boosts energy

While Deutsche Bank dominated the day in terms of activity, it barely missed taking the award for the day’s top percentage gainer.

That honor went to the oil and gas arena – specifically, to Legacy Reserves LP and Vanguard Natural Resources LLC.

Legacy’s 8% series A fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYP) improved 39 cents, or 9.73%, to close at $4.40, while the 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) added 21 cents, or 5.07%, to finish at $4.35.

Vanguard’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) gained 21 cents, or 7.07%, to $3.18.

Though not overly active, each of the issues saw above-average trading volume during the session.

The gains came as it was reported that OPEC had reached a deal to limit production for the first time since 2008. The decision came as members of the cartel held an informal meeting in Algeria.

Though details have not yet been decided – official terms are expected to be ironed out at a formal meeting in November – OPEC members agreed to cut total production to 32.5 million barrels per day.

Currently, the organization is pumping a total of 33.24 million barrels per day.

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